www.pwc.

com/uz

Guide to doing
business
and investing in
Uzbekistan

2016 edition
Guide to doing business
and investing in
Uzbekistan

2016 Edition

The information in this Guide is based on taxation law

and current practices. It is intended to provide a
general guide only on the subject matter and is
necessarily in a condensed form. It should not be
regarded as a basis for ascertaining the tax liability in
specific circumstances. Professional advice should
always be taken before acting on any information in
the Guide.
UZBEKISTAN PROFILE AND INVESTMENT CLIMATE .......................................... 1
INTRODUCTION ......................................................................................................... 1
GOVERNMENT STRUCTURE AND LEGAL SYSTEM ............................................................. 2
PEOPLE .................................................................................................................... 2
ECONOMY ................................................................................................................ 3
FOREIGN TRADE ........................................................................................................ 4

BUSINESS ENVIRONMENT ................................................................................... 6

BUSINESS CLIMATE ................................................................................................... 6
INTERNATIONAL AGREEMENTS ................................................................................... 7
REGULATIONS FOR BUSINESS ..................................................................................... 7
PROPERTY MARKET ................................................................................................... 8

FOREIGN INVESTMENT AND PRIVATISATION .................................................... 9

FOREIGN INVESTMENT ............................................................................................... 9
LAND PRIVATISATION ...............................................................................................13

BANKING, FINANCE AND INSURANCE................................................................ 15

BANKING SYSTEM..................................................................................................... 15
FOREIGN CURRENCY MARKET AND FOREIGN CURRENCY RULES ..................................... 16
SPECIALISED FINANCIAL INSTITUTIONS ...................................................................... 17

IMPORTING AND EXPORTING............................................................................ 18

TRENDS IN CUSTOMS POLICY .................................................................................... 18
NEW CUSTOMS CODE .............................................................................................. 18
IMPORT RESTRICTIONS ............................................................................................ 18
CUSTOMS PAYMENTS ............................................................................................... 19
IMPORT RELIEF ....................................................................................................... 20
DOCUMENTATION AND PROCEDURES ..........................................................................21
CUSTOMS REGIMES.................................................................................................. 22

BUSINESS ENTITIES ........................................................................................... 23

LEGAL FRAMEWORK ................................................................................................ 23
FORMS OF BUSINESS ENTITIES .................................................................................. 23
REGISTRATION REQUIREMENTS ................................................................................ 25
PRODUCTION SHARING AGREEMENTS ........................................................................ 26

LABOUR RELATIONS AND SOCIAL SECURITY ................................................... 27

LABOUR MARKET .................................................................................................... 27
SOCIAL SECURITY .................................................................................................... 28
FOREIGN PERSONNEL .............................................................................................. 29

ACCOUNTING AND AUDIT REQUIREMENTS ...................................................... 30

ACCOUNTING .......................................................................................................... 30
CHART OF ACCOUNTS ................................................................................................31
AUDIT REQUIREMENTS .............................................................................................31

TAX SYSTEM AND ADMINISTRATION ................................................................ 32

TAX SYSTEM ........................................................................................................... 32
DIRECT AND INDIRECT TAX BURDEN .......................................................................... 32
PRINCIPAL TAXES.................................................................................................... 33
LEGISLATIVE FRAMEWORK ....................................................................................... 33
TAX TREATIES......................................................................................................... 33
TAX RETURNS AND PAYMENTS .................................................................................. 34
OVERPAID TAXES .................................................................................................... 35
WITHHOLDING TAXES ............................................................................................. 35
TAX AUDITS ........................................................................................................... 35
PENALTIES ............................................................................................................. 36

TAXATION OF CORPORATIONS .......................................................................... 37

CORPORATE TAX SYSTEM ......................................................................................... 37
TAXABLE INCOME.................................................................................................... 37
DEDUCTIBILITY OF EXPENSES ................................................................................... 38
RELATED PARTY TRANSACTIONS ............................................................................... 39
FOREIGN EXCHANGE ............................................................................................... 39
TAX COMPUTATIONS AND RATES ............................................................................... 39
OTHER TAXES ......................................................................................................... 39
TAXATION OF SUBSURFACE USERS ............................................................................. 41

TAXATION OF INDIVIDUALS .............................................................................. 42

TERRITORIALITY AND RESIDENCE ............................................................................. 42
TAXABLE INCOME.................................................................................................... 42
NON-TAXABLE INCOME/DEDUCTIONS ........................................................................ 43
TAXATION OF FOREIGN NATIONALS ........................................................................... 43
TAX COMPLIANCE .................................................................................................... 43

VALUE ADDED TAX ............................................................................................. 45

INTRODUCTION ....................................................................................................... 45
SCOPE OF VAT ........................................................................................................ 45
ZERO RATING ......................................................................................................... 46
EXEMPT SUPPLIES ................................................................................................... 46
TAXABLE AMOUNT................................................................................................... 46
NON-RECOVERABLE INPUT VAT................................................................................ 47
VAT COMPLIANCE ................................................................................................... 47

INTRODUCTION TO PRICEWATERHOUSECOOPERS ......................................... 49

PRICEWATERHOUSECOOPERS WORLDWIDE ORGANISATION ......................................... 49
PRICEWATERHOUSECOOPERS IN UZBEKISTAN............................................................ 49

APPENDICES ....................................................................................................... 50
APPENDIX A – TIPS FOR THE BUSINESS VISITOR.......................................................... 50
APPENDIX B – MAJOR TAX RATES (OTHER RATES ARE MENTIONED IN THE GUIDE) .......... 51
APPENDIX C – WITHHOLDING TAXES ........................................................................ 52
APPENDIX D – USEFUL SOURCES OF INFORMATION ..................................................... 54
Uzbekistan profile and investment climate

Investor considerations

 Uzbekistan is situated in the centre of Central Asia

 Uzbekistan is double-landlocked
 Uzbekistan offers young and generally well-educated workforce
 Uzbekistan is a very attractive consumer market with about 31 mln population
 Transport and communication systems are well developed

Introduction The highest point in Uzbekistan is Mountain Adelunga at

4,301 metres (14,111 feet).
Map
Uzbekistan is divided into 12 provinces (viloyats) with
their ‘capital’ towns, 1 autonomous republic
(Karakalpakstan), and 1 independent city (Tashkent).

Province Capital Population,

City 2016 data

Tashkent City Tashkent 2 393.2

Andijan Viloyat Andijan 2 910.5

Bukhara Viloyat Bukhara 1 815.2

Ferghana Viloyat Ferghana 3 505.3

Geography and climate
Jizzakh Viloyat Jizzakh 1 276.1
Uzbekistan is approximately the size of Morocco or
California and has an area of 447,400 square kilometres 2 603.4
Namangan Viloyat Namangan
(172,700 square miles). It is the 56th-largest country
(after Sweden). 927.9
Navoi Viloyat Navoi

Uzbekistan stretches 1,425 kilometres (885 miles) from

Kashkadarya Viloyat Karshi 3 025.6
west to east and 930 kilometres (578 miles) from north
to south. Bordering Turkmenistan to the southwest,
Samarkand Viloyat Samarkand 3 583.9
Kazakhstan and the Aral Sea to the north, and Tajikistan
and Kyrgyzstan to the south and east, Uzbekistan is not
Sirdarya Viloyat Gulistan 790.6
only one of the largest Central Asian states but also the
only Central Asian state to border all of the other four.
Surhandarya Viloyat Termez 2 411.5
Uzbekistan also shares a short border with Afghanistan
to the south.
Tashkent Viloyat Tashkent 2 794.1

Uzbekistan is a dry, double-landlocked country of which

Khorezm Viloyat Urgench 1 746.9
10% consists of intensely cultivated, irrigated river
valleys. It is one of two double-landlocked countries in
Republic of Nukus 1 791.1
the world – the other being Liechtenstein; and although
in the case of Uzbekistan this is less clear, since it has Karakalpakstan
borders with two countries (Kazakhstan in the north and 31 575.3
Uzbekistan
Turkmenistan in the south) bordering the landlocked but
non-freshwater Caspian Sea from which ships can reach Source: The State Committee on statistics of the Republic of Uzbekistan,

the Sea of Azov and thus the Black Sea, the latest available data for 2016

Mediterranean Sea and the oceans.

1
History stay in office until 2000. He was further re-elected in the
January 2000 presidential election. A referendum in
The Republic of Uzbekistan has an immensely rich
January 2002 extended the presidential term in office
heritage in terms of culture, art and natural resources.
from five to seven years. Mr Karimov was again re-
The monuments that remain throughout the country bear
elected in December 2007 for a 7-year term. In
witness to a long and eventful history in which Alexander
December 2011 the Senate of the Oliy Majlis of the
the Great, Genghis Khan and Tamerlane the Great all left
Republic of Uzbekistan approved the Law “On
their marks. The Uzbeks are descendants of nomadic
introduction of amendments to article 90 of the
Mongol tribes who mixed with the sedentary inhabitants
Constitution of Uzbekistan”, which envisaged the
of Central Asia during the 13th century. The Khanates of
decrease of the presidential term to a five-years.
Khiva and Kokand and the Emirate of Bukhara ruled the
region during the 18th and 19th centuries. Russia became
increasingly interested in the region in the 18th century. Government structure and legal
This interest intensified in the 19th century as Russia and system
Britain competed for influence in a diplomatic and
According to the Constitution of 8 December 1992,
occasional military struggle known as "The Great Game".
Uzbekistan is a sovereign, democratic republic. The
In 1865 Tashkent, the richest city in Central Asia fell to
country is headed by President. The government
the Russians, and by 1873 the last of the region's powerful
(Cabinet of Ministers) is subordinate to the Oliy Majlis
traditional rulers, the Khans in Khiva, had fled and
(Parlament) and the President, who appoints the Prime
Russia stood in control of the whole Central Asia.
Minister, deputy Prime Ministers and ministers subject to
the approval of the legislature.
The Central Asian territories initially supported the 1917
Bolshevik revolution in the hope that they could achieve
The highest legislative body is the two-chamber Oliy
independence from Russia. However, support soon
Majlis, which is elected for a five-year term. The
turned to fierce opposition from the nationalist basmachi
Legislative chamber (lower) consists of 150 members
movement and the Soviet forces were forced to withdraw.
elected by Uzbek citizens based on ballot voting.
Soviet power was re-established in September 1919,
Members of the higher chamber – the Senate – are
although armed opposition continued into the early
elected from each region of Uzbekistan, the Republic of
1920s. On 27 October 1924 the Uzbek Soviet Socialist
Karakalpakstan and Tashkent city, by six members from
Republic (UzSSR) was created, and in May 1925 became
each territory. Sixteen members of the Senate are
part of the Union of Soviet Socialist Republics (USSR).
appointed by the President of the Republic of Uzbekistan
There had been little industrial development in Central
out of the most competent citizens with outstanding
Asia under Tsarist rule, although some raw materials
achievements in and contributions to science, literature
were extracted. During World War II, Uzbekistan's
and art. The President, with the approval of the
industrial base was enlarged by the re-location of
Constitutional Court, may dissolve the Oliy Majlis.
factories from the war-zone. Post-war Soviet
development policies focused on the exploitation of the
There are four officially recognised parties which are the
country's raw materials, with particularly heavy
People’s Democratic Party, Social Democratic Party
investment in the production of cotton. By the late 1980s
“Adolat”, Democratic Party “Milliy Tiklanish” and Liberal
the republic was producing 90% of the Soviet Union's
Democratic Party “Movement of Entrepreneurs and
cotton, a one thirds of its gold and half of its uranium.
Businessmen” and one movement – “Ecological
Movement of Uzbekistan”.
The rise to power of President Mikhail Gorbachev and the
greater political and cultural freedom permitted under
glasnost (openness) allowed for the wider discussion of
People
economic and ecological issues as well as previously Population
unexamined aspects of Uzbek history. The poor state of
Uzbekistan is Central Asia's most populous country. The
the environment as a result of over-irrigation of the
population of Uzbekistan, reaching more than 31.5
cotton crop and the high incidence of birth defects
million people as of 1 January 2016 is concentrated in the
attributed to the indiscriminate use of pesticides were
south and east of the country and comprises nearly half
major sources of popular dissatisfaction. On 29 August
the region's total population. Uzbekistan was one of the
1991, 10 days after the collapse of the anti-Gorbachev
poorest republics of the Soviet Union; much of its
coup in Moscow, an extraordinary session of the Supreme
population was engaged in cotton farming in small rural
Soviet voted to declare the Republic independent, and
collective farms (shirkats). Nowadays, according to
changed its name to the Republic of Uzbekistan.
World Bank reports, the fraction of the rural population
constitutes 64%. The population of Uzbekistan is
Direct presidential elections were held on 29 December
relatively young: 29% of people are 14 or younger.
1991 and won by Mr Karimov with a reported 86% of the
vote. A referendum was held simultaneously in which
Uzbekistan is a heterogeneous society dominated by
98% of participants endorsed Uzbekistan's independence.
ethnic Uzbeks (80% of the total population). The largest
Mr Karimov won a referendum in 1995, allowing him to
ethnic minority groups are Russians (5.5% of the total
2
population), Tajiks (5%), and Kazakhs (3%). Many
members of the minor ethnic groups have left the country
since independence. For instance, many Jews emigrated
to Israel or US, and a considerable number of ethnic
Germans and Russians returned to their homelands. This
has resulted in a loss of many valuable technical,
industrial, and professional skills in the country.
However, the situation has recently improved and
currently Uzbekistan possesses a number of young
professionals who received various educational degrees at
universities worldwide through the state-funded
educational programme “Iste’dod Foundation”.
Language
The official state language is Uzbek. However, quite a few
people in Tashkent and largest cities (including Uzbeks)
still use Russian as their native language. Besides, state
organisations and businesses use both Uzbek and Russian
as their business correspondence languages.
Like in many other countries of the former Soviet Union,
English is widely educated in Uzbekistan. However,
English-speaking population is mostly based in Tashkent.
In December 2012 President of Uzbekistan signed the
Resolution “On measurements on further improvement
of the system of studying of foreign languages”. In
accordance with this Resolution teaching of foreign
languages, mainly English, should begin from the first
year at all general schools.
Religion
During the communist years, religious observance was
strictly forbidden. Thousands of mosques were closed,
observance of Ramadan banned, and wearing veils and
sale of the Koran was forbidden. As a result, only a few
Uzbeks have an in-depth knowledge of Islam, although
the majority of them would describe themselves as
Muslims and Islamic traditions run deep. Many mosques
have re-opened, and veils are becoming more prevalent.
Official government policy is opposed to the emergence of
Islamic extremism in Uzbekistan, and has put pressure
on the country's Muslim clergy to guard against a rise in
extremism. Roughly 99% of Muslims in Uzbekistan are
followers of the “Hanifism” wing of Islam, which is the
most liberal school of Islam in terms of religious
tolerance.
Education
Uzbekistan enjoys quite high literacy rate (among adults
older than 15) which, in part, is attributable to the free
and universal education system.
Basic public education consists of two levels – 9-year
primary and secondary school and 3-year college/lyceum. Inflation, though lower than in the mid-1990s, remained
University education can be obtained after completing high up until 2003 (estimated 50% in 2002, 21.9% in
the college education. 2003). Tight economic policies in 2004 resulted in
drastic reduction of inflation, to 3.8% (while alternative
estimates based on price of true market basket, put it at
15%). In 2015, the official inflation rate comprised 5.6%.
3
There are 65 higher educational entities in the country –
State Universities in each regional centre are among
them. In addition, several international universities are
presented in Uzbekistan, including Westminster
International University, branches of the Moscow State
University, Russian University of Oil and Gas, Singapore
Institute of Management, Turin Polytechnic University,
INHA University in Tashkent.
There are also a number of technical colleges that are not
considered as higher education.
Economy
General description
Uzbekistan has seen few effects from the global economic
downturn due to its relative isolation from the global
financial markets, and continued its strong performance,
registering 8% growth in 2015. GDP growth was driven
mainly by favourable trade terms for its key export
commodities like copper, gold, natural gas, cotton, and
government’s macro-economic management (World
Bank file, 2016). Although the global financial crisis has
hardly affected the domestic financial sector directly, it
has slowed exports, remittances, and investment due to
slower economic growth in Russia, Kazakhstan and
certain other Uzbekistan’s large trading partners.
Uzbekistan is a country with a GNI per capita of USD
2,150 and PPP equivalent of USD 6,110 in 2015.
Economic production is concentrated in commodities:
Uzbekistan is now the world's sixth-largest producer and
the world's fifth-largest exporter of cotton and the ninth
world major producer of gold. It is also a regionally
significant producer of natural gas, coal, copper, oil, silver
and uranium.
Facing a multitude of economic challenges upon
acquiring independence, the government adopted an
evolutionary reform strategy, with emphasis on state
control, reduction of import, and self-sufficiency in
energy. The gradualist reform strategy has involved
postponing significant macroeconomic and structural
reforms.
The economic policies have repelled foreign investment,
which is one of the lowest per capita in the CIS. For
years, the largest barrier to foreign companies entering
the Uzbek market has been difficulty in currency
conversion. In 2003, the government accepted the
obligations of Article VIII under the International
Monetary Fund, providing for full currency convertibility.
However, strict currency controls and tightening of
borders have lessened its effects.
The latest estimate of the year-average consumer price
index for 2015 was 8.5% (CIA Factbook).
The government of Uzbekistan restricts imports in many
ways, including high import duties. Excise taxes are
applied at high rates to protect locally produced goods
resulting in total charges amounting to as much as 100 or
even 150% of the actual value of the product, making
imported products virtually unaffordable. Import
substitution is an officially declared policy. A number of
the CIS countries are officially exempt from the
Uzbekistan import customs duties.
GDP
2014 2015
GDP (USD) 59.8 billion 60.9 billion
GDP growth annual 8.1 % 8%
Source: The State Committee of Republic Uzbekistan on statistics, 2016
Uzbekistan had the highest GDP growth rate among the
CIS countries in 2015. More than half of the GDP (56.7%)
was generated by micro-firms and private enterprise
entities.
In 2015, the volume of industrial production grew by 8%,
agricultural production increased by 6.8%, services rose
by 14% and construction grew by 17.8% as compared to
the previous year.
Transport
Tashkent, the nation's capital and largest city, has a 3-line
subway built in 1977, and expanded in 2001 after 10 years
of independence from the Soviet Union. Uzbekistan used
to be the only country in Central Asia with a subway
system (until opening of subway in Almaty in 2012)
which is considered as one of the cleanest subway
systems in the world. There are municipal operated
buses running across the city. Also there are many taxis,
both private and company service taxis. Uzbekistan has
car and bus producing plants, which produce modern
vehicles. The car production is supported by the
government. The train links are available. They connect
many towns within Uzbekistan as well as with
neighbouring ex-republics of the Soviet Union. After
independence four fast running train systems have been
established. Also, there is a sizeable aircraft plant that
was built during Soviet era, Tashkent Chkalov Aviation
Manufacturing Plant, or ТАПОиЧ in Russian. The plant
originated during the World War II, when production
facilities were evacuated south and east to avoid capture
by advancing Fascist forces. Up until late 1980s, the
plant was one of the leading aircraft production centres in
USSR, but with collapse of Soviet Union its
manufacturing equipment became out-of-date, and most
of the workers were laid off. It used to produce more
than 10 modifications of cargo aircrafts IL-76, wings for
model “AN” heavy freight aircrafts, parts of control panel
for Boeing and British Aerospace a passenger aircraft
4
model, turbo IL-114-100. However, in 2010 the Tashkent
Economic court initiated bankruptcy proceedings on the
plant due to overdue debts and brought external control.
Effective from June 2012 the plant ceased production of
aircrafts related products. Part of the manufacturing
equipment was to be dismantled and sold. The plant
started gradual switch to production of other types of
products, such as household goods, spare parts to
agricultural machinery, building structures etc.
Uzbekistan Havo Yullari (Uzbek Airways) is the national
aviation company established in 1992. The company
offers regular flights to more than 40 cities in Asia,
Europe and America. Frequent flyers may enjoy certain
benefits, such as free tickets and class upgrades.
With establishment of the Free Industrial Economic Zone
in the Navoi region, the Navoi Airport has become a
logistics centre for international cargo transportation. It
is managed by Korean Air.
New air terminal started its functions from 26 September
2011. All flights from Tashkent to local destinations are
carried out from the new terminal "Tashkent-3”, that
meets international standards and has capacity of 400
passengers per hour.
There is also a national project for reconstruction of the
Uzbek automobile road co-sponsored by the Asian
Development Bank and the government of Uzbekistan.
The reconstructed automobile road should become a
highway to connect the major cities across the country.
Communications
Local telephone system is currently under extensive
reconstruction by digitising old analogue lines. All
regions of Uzbekistan are well-covered by the existing
telephone system. National telecommunication operator
"Uzbektelecom" has 50 points of sales, operating on the
principle of "single window" across the country.
There are 5 cellular network providers in Uzbekistan, 3
GSM providers, 1 CDMA provider and 1 both GSM and
CDMA provider. The number of mobile phone service
users exceeded 22 million subscribers by the third
quarter of 2015. Number of Internet users is rapidly
growing every year, and exceeded 12 million users by the
third quarter of 2015.
Foreign trade
In 2015 Uzbekistan’s 6 main trade partners are China –
19.9%, Russia – 17.5%, Kazakhstan – 12.0%, Republic of
Korea– 6.8%, Turkey – 4.7% and Germany– 2.1%. The
main commodities of Uzbekistan that are exported
include energy and oil products, cotton, chemical
products, ferrous and non-ferrous metals, services, food
products, machinery and equipment. The total export of
Uzbekistan for the year 2015 was USD 12.87 billion and
the total import amount was equal to USD 12.42 billion.
The main import commodities of Uzbekistan are food
products, chemicals, energy and oil products, metals
(ferrous and non-ferrous), machinery and equipment,
and services.

5
Business environment
Investor considerations
 Economy is highly regulated by the state
 Low level of copyright protection
 Plenty of office space available
Business climate
Whilst there have been improvements in the recent
years in the economic situation in the Republic of
Uzbekistan, the economy of the country continues to
display some characteristics of an emerging market.
These characteristics include, but are not limited to,
the existence of a currency that is not freely
convertible outside of the Republic of Uzbekistan and
a low level of liquidity in debt and equity markets.
The overall business climate may be described as
stable, but with a potential for rapid growth in the
event of more radical reforms towards market
economy and reduced state regulation of the
economy.
The role of small business and private
entrepreneurship in the country’s GDP and economy
is increasing. In 2015, this sector generated 56.7% of
the GDP and created 77.9% of employments to the
population.
Recognising the importance of the business
community in general and private entrepreneurship in
particular for the economy, the state constantly
updates the legislation in attempts to decrease the tax
and administrative burden on the business. As of 1
January 2016 basic tax rate for unified tax payment
for micro-firms and small businesses, except for
enterprises of trade and public catering, was reduced
from 6% to 5% in order to further lessen tax burden,
support and stimulate development of small and
private businesses.
On 7 February 2011, the President of Uzbekistan
signed a resolution which is directed at expanding
access to commercial bank loans, raw materials and
state procurements for small and private businesses.
In 2012 the International Financial Corporation
provided the first trade credit line to "Asaka" bank in
order to promote the growth of small business in
Uzbekistan. The Government is also taking measures
to improve investment climate of Uzbekistan reducing
the number of statistical, tax and financial reports, as
well as number of activities subject to licensing and
6
permissive procedures, promoting electronic
submission of reports/payments to reduce time spent
by businesses for tax filings.
Uzbekistan continues to strengthen its industrial
potential. Presidential Decree No. УП-4707 of 4
March 2015 approved the program on structural
reforms, industrial modernization and diversification
for 2015-2019. The program envisages
implementation of 846 investment projects on
modernization, technical and technological
renovation for total value of USD 40.8 billion,
including USD 19.6 billion. of projects with identified
investors and financing and USD 21.2 billion in
potential priority projects. Implementation of the
program is expected to ensure average growth of GDP
of 8% per year during 2015-2019.
Uzbek government constantly develops various tools
aimed at improving the local business climate.
For instance, Presidential Decree No.УП-4609 of 7
April 2014 establishes a number of measures aimed at
attracting investments and improving the business
environment in Uzbekistan:
 As of 1 June 2014 it is prohibited to penalise
businesses for violation of legislation
regulating relationships with regulators/
state authorities if such legislation is not
published on the official websites of the
respective regulators/ authorities.
 Moratorium on tax audits is prolonged till 1
January 2017 in respect of small enterprises
that pay taxes in a timely manner and
demonstrate sustainable growth and
profitability (except for liquidation audits,
inspections within criminal investigation,
and those associated with the use of state
funds and centralised resources).
 State tax authorities are no longer allowed to
“freese” transactions on bank accounts of a
company without a court decision due to
non-submission of tax and financial reports
and absence of the company at the registered
legal address.
  As of 1 July 2014 the average number of
employees for small enterprises operating in
labour-intensive industries, in particular in
construction materials industry, food and
light industries, is increased from 100 to 200
employees.
Moreover, Presidential Decree No.УП-4725 of 15 May
2015 establishes a program of measures on protection
of private ownership, small business and private
entrepreneurship and elimination of barriers towards
their development:
 Violations committed in the area of trade
rules, trade and intermediary activity, except
for offenses in extra-large amounts, are to be
shifted from the criminal code jurisdiction to
administrative code jurisdiction by
introducing respective amendments to the
Criminal Code and Civil Code.
 Imprisonment as a measure of punishment
of responsible officers of business entities
who had fully compensated losses caused by
pseudo-bankruptcy and concealment of
bankruptcy is to be abolished by introducing
respective amendments to the Criminal
Code.
 Amendments to legislation are to be
introduced aiming at reduction of excessive
documents and procedures required for
carrying out entrepreneurial activity by
abolishment of the following requirements:
o to have round seals for small
business entitites;
o to obtain legal opinions on business
contracts;
o to submit copies of state
registration certificates during
 “Law on guarantees of freedom of
entrepreneurial activitiy” is to be amended to
establish that benefits and privileges
applicable to small business entitites by law
will be provided without submission of
written requests to state authorities, as it is
currently required.
 Procedures allowing for 24-hour state
registration of business entities through an
automated system of state registration via
Internet (integrated into the Unified portal of
interactive state services) are to be
implemented.
International agreements
Uzbekistan is a member of the United Nations (since 2
March 1992), the Euro-Atlantic Partnership Council,
Partnership for Peace, and the Organisation for
Security and Cooperation in Europe (OSCE). It
7
belongs to the Organisation of the Islamic Conference
(OIC) and the Economic Cooperation Organisation--
comprised of the five Central Asian countries,
Azerbaijan, Turkey, Iran, Afghanistan, and Pakistan.
In 1999, Uzbekistan joined the GUAM alliance
(Georgia, Ukraine, Azerbaijan and Moldova), which
was formed in 1997 (making it GUUAM); yet in 2005,
the Government of Uzbekistan gave an official notice
of withdrawal from the organisation.
Uzbekistan is also a member of the Shanghai
Cooperation Organisation (SCO) and hosts the SCO’s
Regional Anti-Terrorist Structure (RATS) in
Tashkent. Uzbekistan also joined the Central Asian
Cooperation Organisation (CACO) in 2002, which has
dissolved in January 2006. In 2006 Uzbekistan
joined the Eurasian Economic Community and
temporarily withdrew from membership in 2008.
There are representative offices of Intermational
Monetary Fund (IMF), World Bank (WB), European
Bank for Research and Development (EBRD), Asian
Development Bank (ADB), Islamic Development Bank
(IDB) in Uzbekistan participating (directly or co-
funding) in many social and investment projects.
Regulations for business
Uzbekistan has a highly regulated economy with a
vast number of regulatory authorities.
Regulatory authorities
The principal regulatory authorities are the Cabinet of
Ministers (responsible for the overall regulation of the
economy), the Ministry of Finance (responsible for
fiscal and taxation policy), the Central Bank
(responsible for regulation of banks and monetary
policy), the State Tax Committee (responsible for
collection of taxes), the State Customs Committee
(responsible for collection of customs payments), the
Ministry of Economy (responsible for development
and implementation of long-term social and economic
strategies of the state) and the Ministry of Foreign
Economic Relations, Investment and Trade
(responsible for foreign trade and attraction of foreign
investment).
Competition policy
Competition is governed by the Law on Competition.
The Law is applied to cases when activities of state
agencies, legal entities and/or individuals adversely
affect the competition in the Uzbek market, and sets a
number of measures to prevent such adverse
influence. Control over adherence to the Law
previously used to be enforced by the Anti-Monopoly
Committee. As of November 2012, the control was
shifted to the newly established Committee on
Privatization, Demonopolisation and Competition
Development (Committee on Competition)
established in the result of merger of the Anti-
Monopoly Committee with the State Property
Committee.
Price controls
The state controls purchase prices for strategically
important goods, such as cotton, gold, oil, etc.
Prices for utilities and telephone communication are
also controlled by the government, as these are
provided by the state-owned companies.
Consumer protection
Uzbek legislation provides for consumer protection
(Law of the Republic of Uzbekistan “On Protection of
Consumers’ Rights” of 26 April 1996). There is also a
Federation of societies on protection of consumers’
rights in Uzbekistan.
Consumers may apply for protection of their rights to
the above Federation or Committee on Competition
either in paper, through the phone or special online
resources. Such applications appear to have high
resolution rate. For example, as per information
provided by Federation during the first nine months
of 2015 around 3,647 complaints (applications) were
filed and 93.5% from them were resolved positively.
Property market
Uzbek real estate market rapidly grew over the years
through 2008. However the global financial crisis has
adversely impacted the real estate sector of
Uzbekistan leading to a drop of demand for
purchase/rent of housing and office space.
Current annual price for office space rent in Tashkent
(capital city) varies approximately from USD 100 to
USD 300 per square metre depending on location.
Apartment or house can be purchased by Uzbek
nationals and foreign citizens who reside in
Uzbekistan on a permanent basis and have an
appropriate residence permit.
Uzbek state property is managed by the Committee on
Competition. The main directions of the Committee
on Competition are deepening of economic reforms,
acceleration of denationalisation and privatisation
processes, provision of development and support to
private entrepreneurship in the republic,
antimonopoly regulation, development of
competition, consumer protection and regulation of
bankruptcy and insolvency processes.

Patents, trademarks and copyrights

Uzbekistan has signed international conventions in

patent and/or copyright protection. However, in
practice, there are still a lot of publicly sold products
of video, audio and software piracy.

Uzbekistan is a signatory to the Paris Convention for

the Protection of Industrial Property, the Madrid
Agreement on Trademarks Protection, and the Patent
Cooperation Treaty.

In 2011 the State Patent Agency and Uzbek

Republican Copyright Agency were re-organised into
the Agency on intellectual property, which started to
represent Uzbekistan in the World Intellectual
Property Organization and other international and
regional organizations in the sphere of intellectual
property.

Mergers and Acquisitions

Certain types of mergers and acquisitions are subject

to approval by the Committee on Competition. Such
mergers and acquisitions include those that result in
the creation of financial & industrial groups, holding
companies, as well as creation of companies that
would dominate the market.

8
Foreign investment and privatisation
Investor considerations
 Uzbek legislation provides for a number of tax incentives for foreign investors, especially in oil & gas industry
 Exporters may enjoy reduced corporate income tax and property tax rates
 Additional guarantees and preferences may be provided to foreign investors under investment agreement
 Development of Free Industrial Economic Zone Navoi and two new Special Industrial Zones - in Angren and in
Djizzak
Foreign investment
Investment climate
Uzbekistan has adopted a policy of import
substitution and export orientation. The multiple
exchange rate system and the highly over-regulated
trade regime has led to both import and export
declines since 1996, although imports have declined
more than exports, as the government squeezed
imports to maintain hard currency reserves. High
tariffs and border closures imposed in the summer
and fall of 2002 led to massive decreases in imports of
both consumer products and capital equipment.
Uzbekistan's traditional trade partners are CIS states,
notably Russia, Ukraine, Kazakhstan, and other
Central Asian countries. Non-CIS partners have been
increasing in importance in recent years, with Korea,
China, Japan, Malaysia and Turkey being the most
active. In 2015 and beginning of 2016 Uzbekistan
greeted a number of high-level officials from, China,
Russia, US, South Korea, Kazakhstan, Japan,
Pakistan, Turkmenistan, Latvia and other countries.
During these visits the parties discussed potential
cooperation and investment opportunities.
Investment context
The Laws on Foreign Investments and on Guarantees
and Measures for the Protection of Rights of Foreign
Investors adopted on 30 April 1998, the "Foreign
Investment Laws", provide the legal framework for
foreign investment in Uzbekistan. The laws define the
types of entities in which foreigners can invest, the
conditions governing repatriation of profits and
earnings, and the general rights and guarantees of
foreign investors. Foreigners can invest in a business
venture in Uzbekistan in a number of ways, including
by:
 acquiring share in an existing company by
participating in auctions or tenders organised
under the privatisation programme
9
 acquiring share in an existing company by
direct negotiation with the owners of the shares
or by purchasing shares on the stock market
 forming a joint venture company with an
Uzbek enterprise or individual
 establishing a new, wholly owned company,
orany other form that does not contradict
Uzbek legislation.
To qualify for definition of an enterprise with foreign
investment, the enterprises should have following
characteristics:
 their charter capital is USD 150,000 or more
 at least one of the participants is a foreign legal
entity, and
 foreign investor(s) own at least 30% of the total
charter capital.
Effective 1 July 2002, the amended criteria for the
status of an enterprise with foreign investment is used
for enterprises with the participation of foreign capital
newly established in the Republic of Karakalpakstan
and Khorezm region. The minimum charter capital to
meet the criteria for such enterprises shall be USD
75,000, as opposed to the above standard minimum
limit. This measure is intended to stimulate
investment to these distant regions of Uzbekistan.
Investment protection
Under the Foreign Investment Laws, investments
cannot be nationalised or confiscated without the
payment of compensation. The Foreign Investment
Laws also provide for protection against adverse
changes in the law for a 10-year period following
registration. This 10-year guarantee had been widely
challenged in the past by the tax authorities so that it
would not apply to taxation changes, i.e. introduction
of new taxes and/or increase of tax rates or taxable
objects.
Such different interpretation of the 10-year guarantee
resulted in amendment of the text in the Foreign
Investment Laws, which changed the whole concept of
the foreign investment protection. Thus, from 17
September 2005 the 10-year guarantee is to apply in
the following cases:
 increase of income (withholding) tax rate on
dividends payable to foreign investors
 introduction of additional requirements that (i)
complicate the procedure for repatriation or (ii)
decrease the amount of income (profit)
repatriated by foreign investors, except for
certain cases when such repatriation is banned
due to financial insolvency of enterprises with
foreign investments, protection of creditors’
rights, criminal or administrative sanctions
imposed on individual foreign investors or
other reasons for halting such repatriation
based on the court decision
 introduction of limitations on the size of
investment, including the increase of the
minimum size of charter capital for enterprises
with foreign investments
 introduction of limitations on the share of
foreign investors in charter capitals of Uzbek
enterprises, and
 introduction of additional procedures for visas
of foreign investors, as well as other additional
requirements on foreign investment.
If foreign investor decides to exercise the guarantee it
should file a written notification with the relevant
state authority depending on the nature of the adverse
legislation change under concern. Such notification
serves as a basis for relevant state authority to apply
the legislation that had been effective at the date of
investment.
If the state authority disagrees with the notification it
may apply to the Ministry of Justice of the Republic of
Uzbekistan for legal expertise on the validity of
application of the guarantee by the foreign investor.
The state authority may also apply to the court on
invalid application of guarantee by the foreign
investor.
Profit repatriation
Under the Foreign Investment Laws, foreign investors
are entitled to repatriate profits in convertible
currency after the payment of applicable taxes and
other fees. However, at the time of writing practical
issues remain with respect to currency conversion if
there is no own foreign currency available to pay
dividends.
10
Currency exchange rates
The government introduced currency convertibility on
15 October 2003, lifting many of the restrictions on
the purchase of hard currency and unifying the
exchange rate of UZS. Since unifying the exchange
rate, the government has allowed the currency to
depreciate against the US dollar by a monthly average
of 0.3% in nominal terms. However, since January
2010 the UZS has been falling by a monthly average of
0.4-1.1%.
Effective 1 February 2013:
 Sale of foreign currency to individuals –
residents of Uzbekistan, is carried out by
authorized banks via non-cash international
plastic cards.
 Sale of foreign currency to individuals – non-
residents is carried out in the amount not
exceeding the amount of previously converted
foreign currency (to be confirmed by the
certificate of the prescribed form).
Official exchange rate is UZS 2,943.46 for 1 USD as of
1 July 2016.
Investment incentives
There used to be a number of tax incentives available
to investors and enterprises with foreign investment.
Some of these incentives were set in the general tax
legislation; some of them were granted on a case-by-
case basis, mostly in respect of investments made to
key industries. The case-by-case incentives were
provided by the Government through issuing
enterprise specific decrees.
Effective 1 June 2006, all “non-compliant” and
permanent incentives with respect to payment of
taxes, customs and other mandatory payments
provided earlier by decisions of the Government to
enterprises with foreign investments, were abolished.
The enterprises which happened to lose the tax
incentives had to apply to the Cabinet of Ministers, so
that the latter re-considers granting the incentives.
The Uzbek legislation still provides for certain tax
incentives to encourage manufacturers, importers and
exporters of strategically important products.
On 10 April 2012 the President of Uzbekistan signed a
decree "On additional measures to stimulate direct
foreign investment". Based on the decree above,
enterprises with foreign capital in which the foreign
investor's contribution in cash is not less than USD 5
mln are covered by a ‘grandfathering clause’
protecting them from adverse changes in the tax
legislation for the period of 10 years from the date of
state registration with respect to corporate income
tax, value-added tax (turnover on sale of goods, works
and services), property tax, tax on the improvement
and development of social infrastructure, unified
social tax, unified tax payment, as well as mandatory
contributions to the Republican Road Fund and the
Fund on Reconstruction, Capital Repair and
Equipment of Educational Institutions and Medical
Institutions.
Incentives for Oil & Gas exploration and extraction
companies
Foreign companies carrying out oil & gas exploration
works are granted with certain incentives that include
exclusive exploration rights for a territory with the
possibility to engage in extraction either through a
joint venture company or on terms of a concession.
Such companies and their foreign contractors and
subcontractors are exempt from payment of all forms
of taxes and contributions to non-budget funds during
the exploration period. Additionally, exemptions
should apply to customs payments on the import of
equipment, material and technical resources and
services necessary for the exploration and related
works.
Enterprises and organisations – residents of
Uzbekistan – supplying materials and rendering
services to such foreign companies are exempt from
value-added tax.
Furthermore, oil & gas extracting joint venture
companies established with participation of foreign
companies that are involved in the exploration are
granted a 7-year corporate income tax holiday starting
from the date of commencement of extraction.
Incentives for carrying out export activities
Enterprises exporting goods (works, services) of their
own production for freely convertible currency may
apply reduced rates of corporate income tax as
follows:
 If export share in total sales ranges from 15% to
30%, the effective rate shall be reduced by 30%.
 If export share in total sales is 30% or more,
the effective tax rate shall be reduced by 50%.
This incentive is applied likewise in regards to
property tax. Thus:
 If export share ranges from 15% to 30%, the
property tax rate is reduced by 30%.
 If export share ranges from 30% and higher,
the property tax rate is reduced by 50%.
The incentive in both cases is subject to a restriction
that it does not apply to wholesale / retail sale or
11
intermediary companies, nor to revenues from the
export of specific items such as cotton fibre, oil, gas,
precious metals, etc.
Producers can also defer the payment of their import
VAT in respect of material and technical resources
used for production of goods to be exported. The
deferral is granted for up to 90 days without
application of any interest.
Investment relief
The taxable profits may be reduced by the amounts of
expenditure that qualify as “investments" less the total
annual depreciation charge. The term "investments"
for the purposes of the relief is defined broadly and
includes any investments to develop entity's own
production base, such as the purchase or construction
of business premises, plant and machinery, or
settlement of loans used for this purpose. The
aggregate tax relief for “investment” expenditure is
generally limited to 30% of taxable profits.
Tax incentives for entities with foreign investment
Additional tax concessions are available for
production entities with a substantial foreign
investment component. To qualify for the concession,
an enterprise should meet the criteria of an enterprise
with foreign investment as described in the section
Investment context above.
Thus, foreign investors may import free of import
duties goods for their own production and their
personal needs and for personal needs of foreign
citizens working in Uzbekistan in accordance with
labour agreements established with foreign investors.
Newly established enterprises in the Republic of
Karakalpakstan and Khorezm region that qualify as
enterprises with foreign investment based on the
adjusted criteria as described above are also eligible
for the above exemption.
Effective 1 July 2005, the following tax incentives
have been offered to direct foreign investors. The
statutory definition of direct private foreign
investments is investments made by foreign non-
governmental legal entities, foreign citizens, persons
without citizenship and citizens of Uzbekistan
permanently resident abroad.
Enterprises attracting private foreign investments are
exempt from corporate income tax, property tax,
infrastructure development tax, unified tax payment
(for micro-firms and small enterprises), as well as
contributions to the Republican Road Fund.
Exemption is applicable to main business activity
only.
The above tax incentives are granted if the following,
without limitation, conditions are met:
 the enterprises are located in any city or rural
area settlement of Uzbekistan except Tashkent
region and Tashkent city
 republic of Uzbekistan does not provide
sovereign guarantees for such foreign
investment
 share of foreign capital of enterprises should
not be less than 33%
 investment should be made in hard currency or
new/modern technological equipment, and
 not less than 50% of the respective tax savings
should be reinvested for further development
of enterprises.
Other developments in the foreign investment
legislation of Uzbekistan are commented in relevant
tax sections of this Guide.
Additional Guarantees and Preferences to
Foreign Investors
In August 2005 Decree of the Cabinet of Ministers
introduced a new concept within the foreign
investment legislation. Thus, if a foreign investor is
granted additional guarantees and protective
measures (incentives and preferences), other than
those already provided by the general legislation, an
investment agreement must be concluded between the
Government and this foreign investor. The
Government in such investment agreement would be
represented by the Ministry of Foreign Economic
Relations, Investments and Trade of the Republic of
Uzbekistan (MFERIT).
Investment agreement should include, without
limitation, the following provisions:
 period and terms of the agreement validity
 rights and obligations of the investor in respect
of the amount of investment, level of
production, guaranteed level of localisation of
production and quality of produce, level of
export of goods and services of own
production, repayment of attracted loans
guaranteed by the Government of the Republic
of Uzbekistan, compliance with the ecology
protection legislation, rational usage of natural
resources, compliance with the labour
legislation and safety measures, and other
aspects of production activities
 rights and obligations of the Government of the
Republic of Uzbekistan including obligations of
providing additional guarantees and security
measures
12
 schedules and dates for preparation of business
plan, conclusion of sub-contracts, funding
sources, time-line of project implementation,
regulation on technical supervision over the
project implementation
 procedures and deadlines for submission of
reports by the investor on execution of the
obligations
 responsibilities of parties for failures to comply
with the terms of the investment agreement,
and
 procedures for introduction of amendments to
the agreement or its termination, procedures
and place of disputes resolution.
The draft investment agreement should be pre-agreed
with MFERIT. Before filing the draft investment
agreement, the foreign investor should obtain
approvals of the agreement terms and conditions from
the Ministry of Justice, Ministry of Finance, Ministry
of Economy and the State Tax Committee. Once the
investment agreement is finalised by MFERIT and the
foreign investor, it is filed with the Cabinet of
Ministers for the latter’s approval.
Free Industrial Economic Zone in the Navoi
region (Navoi FIEZ)
Navoi FIEZ has been created for a preliminary term of
30 years with opportunity for prolongation. During
that period special customs, foreign currency and tax
regimes will be in force within its territory, as well as a
simplified procedure for issuing works permits for
non-residents who come to work in the Navoi FIEZ.
Legal entities registered in the Navoi FIEZ are allowed
to make payments in foreign currency within the
territory of the Navoi FIEZ and to local Uzbek
suppliers for goods, works and services outside of the
territory; use preferable conditions and means of
payments for exported and imported goods.
Furthermore, legal entities registered with the Navoi
FIEZ are exempt from land tax, property tax,
corporate income tax, infrastructure development tax,
unified tax payment (for small companies),
contributions to the Road Fund and Fund on
Reconstruction, Capital Repair and Equipment of
Educational Institutions and Medical Institutions,
provided that the amount of their direct investments
are:
 from EUR 3 mln to EUR 10 mln – exemption is
valid for 7 years.
 from EUR 10 mln to EUR 30 mln – exemption
is valid for 10 years (in the following five years,
the income tax and unified tax payment rates
are set at half the effective general rate).
  in excess of EUR 30 mln – exemption is valid
for 15 years (in the following ten years, the
income tax and unified tax rates are set at half
the effective general rate).
Another exemption provided to legal entities
registered with the Navoi FIEZ is a relief from
customs payments (except for customs clearance fees)
on imported equipment, raw materials and spare
parts required for production of the goods for export
for the whole period of the Navoi FIEZ functioning.
The customs payments on raw materials and spare
parts imported for production of goods for the
Uzbekistan domestic market are levied in the amount
of 50% of the effective general rates (except customs
clearance fees) with a payment deferral for up to 180
days, unless the Uzbek legislation provides a more
preferable regime.
Legal entities established in the Navoi FIEZ are also
covered by a ‘grandfathering clause’ protecting them
from adverse changes in the tax legislation. This
clause does not apply though to legislative acts
regulating taxation of excisable goods.
22 enterprises operate in Navoi FIEZ as of second
quarter 2016.
Special Industrial Zone in Angren (Angren
SIZ)
Angren SIZ was established in 2012. The term of
operation will be 30 years with opportunity for
prolongation. During this period special customs and
tax regimes will be in force within its territory.
Resolution grants exemptions for legal entities
registered within the SIZ “Angren” from corporate
income tax, property tax, infrastructure development
tax, unified tax payment (for small companies),
contributions to the Road Fund, provided that the
amount of their direct investments are:
 from USD 300,000 to USD 3 million –
exemption is valid for 3 years.
 from USD 3 million to USD 10 million USD –
exemption is valid for 5 years.
 over USD 10 million– exemption is valid for 7
years.
Legal entities registered with the SIZ “Angren” would
also benefit from a relief from customs payments
(except for customs clearance fees) on imported
equipment, raw materials and spare parts that are not
produced in Uzbekistan, imported to the territory of
the SIZ “Angren” for implementation of projects, as
per the lists approved by the Cabinet of Ministers.
13
As of third quarter 2015 number of SIZ “Angren”
participants comprises 20 legal entities.
Special Industrial Zone “Djizzak”
In accordance with Presidential Decree No.УП-4516
of 18 March 2013 new Special Industrial Zone
“Djizzak” is to be created in Djizzak region (SIZ
“Djizzak”) for a preliminary term of 30 years with
potential prolongation. During that period special
customs and tax regimes and benefits will be in force
within its territory.
Decree provides exemption for legal entities
registered with the SIZ “Djizzak” from corporate
income tax, property tax, infrastructure development
tax, unified tax payment (for small companies),
contributions to the Road Fund, provided that the
amount of their direct investments are:
 from USD 300,000 to USD 3 million –
exemption is valid for 3 years.
 from USD 3 million to USD 10 million –
exemption is valid for 5 years.
 over USD 10 million USD – exemption is valid
for 7 years.
Legal entities registered with the SIZ “Djizzak” would
also benefit from a relief from customs payments
(except for customs clearance fees) on imported
equipment, raw materials and spare parts that are not
produced in Uzbekistan, imported to the territory of
the SIZ “Djizzak” for implementation of projects, as
per the lists approved by the Cabinet of Ministers.
Nine entreprises were registered with SIZ “Djizzak” in
2015. It is planned that new entreprises producing
more than 10 types of goods are going to be
established in 2016.
Land privatisation
Although according to the Land Code of the Republic
of Uzbekistan land is the sole property of the state, on
24 July 2006 Presidential Decree was issued on
“privatisation of land plots occupied by property of
legal entities and/or individuals”.
The Decree enforced the right of legal entities –
residents of the Republic of Uzbekistan – to privatise,
as of 1 January 2007, the land plots where the
buildings of these legal entities are located (and the
adjacent area). Privatisation by legal entities is
voluntary and based on the market value of the land.
Otherwise, the legal entities which do not privatise the
land plots (and the adjacent area) would continue use
of the land on a long-term rent basis. The long-term
rent cannot be less than 30 years and more than 50
years.
As regards privatisation of land for the individual
housing purposes, the Decree enforced this right to
individuals – residents of the Republic of Uzbekistan
– as of 1 January 2008. Privatisation by individuals
can be:

 voluntary, in respect of the land plot owned by

individuals (upon the right of permanent use or
life-long inheritance) and occupied (according
to the state land cadastre) as at the Decree date
– such land is to be privatised based on its
market value
 voluntary, in respect of the land plots on sale
for individual housing construction – such land
is to be privatised through auctions, and
 mandatory, in respect of the land plots
occupied by the existing individual housing
constructions which are sold or donated
(unless donated to close relatives) – such land
is to be privatised based on its market value.

However, there has been no guidance for practical

implementation of the Decree. Hence, the legal
entities and individuals continue using the land plots
on the terms existed prior to the Presidential Decree.

14
Banking, finance and insurance
Investor considerations
 Certain operations related to “movement of capital” are subject to licensing by the Central Bank of Uzbekistan
 Banking, credit union and leasing services are growing
 There are subsidiaries of few foreign banks in Uzbekistan providing banking services
 Money laundering legislation is undergoing certain changes
 Exporters are required to sell 50% of proceeds in foreign currency to bank, unless specifically exempt
Banking system
Banking market
Banking system in Uzbekistan is regulated by the
Central Bank of Uzbekistan. The Central Bank is a
non-commercial fully state owned entity empowered
to control monetary policy, regulate settlements
between the business entities and activities of the
Uzbek commercial banks, manage gold and currency
resources of the republic, license banking and credit
activities. The Central Bank reports to the Senate.
As of 1 January 2015, the Central Bank of Uzbekistan
has reduced the refinancing rate from 10% to 9%. The
reduction of refinancing rate is intended to reduce
interest rates in monetary markets, thus, reducing
cost of loans in the economy.
The following operations related to the movement of
capital are subject to licensing by the Central Bank:
 attraction of loans in foreign currency from
non-resident entities
 opening of deposits in foreign currency in
foreign banks, financial institutions and non-
bank entities
 direct or portfolio investment in foreign
currency to foreign enterprises, purchase of
shares of foreign enterprise, and
 other non-current (long-term) transactions in
foreign currency.
The banking sector can be divided into distinct
groups:
 state controlled banks – National Bank of
Uzbekistan for Foreign Economic Activity
(NBU), UzPromstroybank, Agro Bank (ex.
Pakhta Bank), Asaka Bank, Halk Bank
(People’s Bank), Qishloq Qurilish Banki, etc
15
 banks with foreign investment –Uzbek -
Korean Development Bank, Uzbekistan-
Turkish Bank, Saderat Bank, Savdogar Bank,
and
 medium and smaller size private banks
Hamkor Bank, Kapital Bank, etc.
Money laundering
In August 2004 the Republic of Uzbekistan enforced
the Law for prevention of legalisation of income from
criminal activities and financing of terrorism
(amended as of 22 April 2009). The Law defines
preventive measures, such as: control by a special
state authority, internal control and client acceptance
checks by the entities involved in money/assets
transfer operations (e.g. banks, insurance companies,
leasing companies, notary offices, etc.).
Thus, entities involved in money/assets transfer
operations should perform client acceptance checks
and other internal control procedures to identify
suspicious transactions. Such cases should be
reported to the special state authorities (department
for addressing tax and currency crimes and
preventing legalisation of income from criminal
activities under the Prosecutor General’s Office of
Uzbekistan).
The following transactions are also subject to
reporting to the special committee:
 transactions where one of the parties is a
person permanently or temporarily residing in
a country which is not a participant of the
international cooperation group for prevention
of legalisation of income from criminal
activities and financing of terrorism, and
 transactions performed by a person (legal
entity or individual), which is suspected in
terrorism, or which is a shareholder of an
entity that is suspected in terrorism.
In late 2009 there were a series of legislative acts
issued to provide for practical implementation of this
Law. These documents set rules for banks, insurance
and audit companies, as well as non-bank credit and
real estate organisations to perform certain
acceptance checks and report on any suspicious
transactions to competent authorities.
New Rules of internal control on prevention of
legalisation of income, received from criminal activity
and terrorist financing were approved by the
Resolution of the Board of the Central Bank
and the Prosecutor General’s Office in November
2013.
According to these rules a number of additional
verification measures were introduced. Verification
measures included personal identification,
verification of powers, identification of the bank
client’s owner and review of business
transactions/documents of bank clients on a constant
basis.
On 15 April 2015 certain amendments were
introduced to the above rules, including but not
limited to the following.
 New definitions were introduced: "countries
that do not participate in the international
cooperation on counteracting money
laundering and the finance of terrorism",
"offshore zone", and “risk”.
 Additional standards and objectives were
introduced for audit companies providing
accounting/ bookkeeping services, e.g. analysis
of transactions with amount exceeding 300
MMW (approx. USD 14,000) while previously
only doubtful and suspicious transactions
should’ve been analysed.
 Enhanced check-ups should be carried out in
respect to transactions where one of the parties
is a legal entity registered in the country that
does not participate in the international
cooperation on counteracting money
laundering and the finance of terrorism, in
offshore zone, or in respect to high-risk
transactions.
Foreign currency market and
foreign currency rules
All Uzbek enterprises including enterprises with
foreign investment (except for small size enterprises
meeting certain criteria and some entities specific
exemption criteria), are required to convert 50% of
their hard currency revenue receipts into UZS through
the domestic foreign exchange market. Conversion
must be arranged through a bank authorised to
undertake such activity.
16
All companies participating in foreign trade are
obliged to present to the authorities statistic reports
on export and import of goods (works, services) and
on movement of hard currency associated with
export-import operations. On the basis of these
statistic reports, the Ministry of Economy, Ministry of
Foreign Economic Relations, Investments and Trade
and Ministry of Finance together with the Central
Bank establish and monitor fulfilment of forecasted
export-import operations and mandatory sale of hard
currency proceeds.
Settlements between businesses may only be
performed through bank transfers, regardless of the
type of business. Settlements for goods (works,
services) in Uzbekistan are allowed in UZS only. An
enterprise's right to hold petty cash is restricted; it
may only withdraw cash from its bank accounts for
two specific purposes: for the payment of wages and
to cover certain allowances for business trips. Uzbek
enterprises are prohibited from holding bank
accounts outside the country without obtaining prior
approval from the Central Bank. Uzbek nationals are
not allowed to hold bank accounts outside of
Uzbekistan, unless they are physically on a (long-
term) trip.
Uzbek nationals are allowed to export foreign
currency in equivalent of up to USD 2,000 in cash
without any approval. A bank certificate is required
for export of foreign currency in the equivalent of
between USD 2,000 to USD 5,000. Any amounts of
foreign currency exported in excess of the equivalent
of USD 5,000 are subject to special permission of the
Central Bank. Foreign individuals are allowed to
export hard currency from Uzbekistan but only up to
the amount initially declared at the customs upon
arrival in the country or withdrawn from their USD
bank account in Uzbekistan.
There used to be certain limitations in the Uzbek
currency control legislation restricting access of the
enterprises to foreign currency conversion. However,
beginning 1 October 2002 (after certain import
regulations were introduced in the summer 2002),
most of the restrictions were loosened. Since then,
the enterprises were able to convert UZS to USD for
the purpose of importing goods provided that certain
requirements are met. Such requirements include
timeliness and completeness of payment of applicable
import taxes and duties, presence of certificates of
conformity for the imported goods and strict
observance of trade rules, such as mandatory
registration with respective authorities, use of cash-
register machines, mandatory labelling of certain
listed goods in the Uzbek language, etc.
Conversion was also available for other purposes, e.g.
paying out dividends, interest on loans, etc.
However, in practice, conversion remained a long and Development (EBRD) and International Monetary
bureaucratic process involving heavy documentation, Fund (IMF). Depending on their priorities and
and it could take considerable period of time to investment programmes, these institutions participate
receive foreign currency in exchange for UZS. in various projects in Uzbekistan.

The converted funds should be deposited at the Leasing is another form of financing for private
special bank account with an authorised bank. If the companies which has been fast developing in the last
purchased foreign currency is not used within seven few years.
days after the purchase, it would be unconditionally
sold back to the authorised bank for subsequent sale There is one stock exchange located in Tashkent. It is
at the local interbank foreign currency trade session. regulated by the Law on securities market. Activity of
stock exchange is subject to licensing.
Monitoring of foreign currency transactions
Currently, the Uzbekistan securities market is not
Recently approved Regulation on monitoring of
mature with limited functions such as facilitating
foreign currency transactions carried out by legal
privatisation process and circulating of secondary
entities and individuals, in general, reinforces existing
securities.
legislation in this are with introduction of certain
changes. Thus, in accordance with the Regulation
The number of insurance companies currently
commercial banks shall provide information to state
operating in Uzbekistan comprises 31, the biggest
tax authorities on foreign exchange transactions
players being: Uzbekinvest, Uzagrosugurta, Kafolat,
carried out by their customers and having certain
Alfa Invest, SZAO INGO Uzbekistan (ex. Standard
signs/characteristics, including:
Insurance Group), Kapital Sugurta.

 execution of payment for imported

goods/services made to non-residents
registered in ‘black listed’ countries (countries
with favourable taxation regime) or payments
to non-residents’ accounts in the banks located
in ‘black listed’ countries. Previously, banks
had to report in cases where import contract
envisaged payments in favour of non-residents
registered in the ‘black listed’ countries
 payment of fines for breaching contractual
obligations under import contract
 payment for provision of services, royalties, as
well as payment of dividends and repatriation
of income
 payment to non-residents for the sale of the
shares (stock) in the charter capital of legal
entities - residents of Uzbekistan and for the
sale of real estate located in Uzbekistan
 payment by the resident made under the
credit/loan agreement. Previously, reporting
had to be made if such credit/loan agreement
envisaged payment of interest (and additional
payments) exceeding for a year 20% of the
principal amount, and
 peceipt of funds to the bank accounts of
individual-resident of Uzbekistan from foreign
legal entity.

Specialised financial institutions

A number of international financial institutions co-
operate with Uzbekistan and have presence in
Tashkent. These include Asian Development Bank
(ADB), Islamic Development Bank (IDB), World Bank
Group (WB), European Bank for Reconstruction and
17
Importing and exporting

Tips for importers/exporters

 Import/export of certain types of goods is subject to the state quotas

 Consumer goods are subject to certification and Uzbek language labelling
 Consumer goods should be sold within 12 months from the date of customs clearance
 Technological equipment under qualifying certain criteria may be exempt from the customs payments
 A local customs broker is essential to obtain speedy customs clearance
 Special packaging is advisable to withstand clearance delays

Trends in customs policy New Customs Code

Foreign enterprises can trade directly with an Uzbek
individual or enterprise, or they can use the services of
a foreign trade agent.
Although the government maintains non-tariff
controls over exports and imports, it has said that it
intends to shift the emphasis to customs tariffs. In
this regard mandatory registration of import contracts
with the Ministry of Foreign Economic Relations,
Investment and Trade (MFERIT) has been abolished
as a measure to further liberate foreign trade.
Moreover, as of January 2013 mandatory registration
of import contracts with customs authorities is
abolished.
Furthermore, the procedure of registration of foreign
trade contracts with banks for monitoring purposes
has also been abolished as of 1 September 2014.
In consequence of this amendment:
New edition of the Customs Code, approved by the
Law of the Republic of Uzbekistan No.ЗРУ-400 оf 20
January 2016, consolidated various customs related
regulations under a single legislative act. For instance,
regulation on determining the country of origin for
goods had been a separate legislative document as
well as rules for application of HS codes (both were
incorporated in the new Customs Code).
Import restrictions
Import of goods into Uzbekistan is subject to
obligatory certification. ‘Certificate of quality
compliance’ is to be issued by “Uzbekstandart” State
Agency, responsible for standardisation, metrology
and certification. Along with application for the
certificate of quality compliance an importer should
present a set of documents describing origin of goods,
country of export, compliance with safety
requirements.

Export/import of certain goods is subject to licensing.

 business entities are supposed to provide
information on their foreign trade contracts
electronically through a Unified Online Portal
for Government Services by using their
electronic signatures;
 monitoring on foreign trade contracts of
entities is carried out by currency control
bodies and authorised banks through Unified
Electronic Informational System on Foreign
Trade Operations;
 contracts registered with the banks prior to 1
September 2014, should be deregistered by the
banks and all information on such contracts
should be entered into the Unified Electronic
Informational System on Foreign Trade
Operations.
Such licenses are issued by state agencies authorised
by the Cabinet of Ministers. The Cabinet of Ministers
may also establish quantitative restrictions (quotas)
for exports and imports of certain categories of goods.
Quotas are allocated on a competitive or auction basis.
The list of such goods subject to licensing and quotas
as well as the process of obtaining licenses and
allocations of quotas is determined by the Cabinet of
Ministers.
Imported consumer goods are subject to mandatory
labelling in the Uzbek language.
As of 1 July 2013 certain imported consumer goods
subject to obligatory labelling in the Uzbek language;
such labelling should be done by producers
(previously, the Uzbek language labelling could have
been made by the importer of goods).

The labeling requirement applies, among others, to:

18
  certain food items
 alcoholic and non-alcoholic beverages
 cigarettes
 certain types of medicines
 personal hygiene and cleaning products
 household appliances, and
 toys.
Labelling requirements do not apply to imported
consumer products not intended for resale or
production/commercial use.
As of 1 July 2010, the Cabinet of Ministers adopted a
new order providing that imported consumer goods
should be sold within 1 year from the date of customs
clearance. Sale of imported goods upon expiry of 12
months from the customs clearance date will be
considered a violation of trade rules.
Customs payments
Classification of goods
Uzbekistan is a member of the International
Convention on harmonised system of coding goods,
which was enforced for Uzbekistan as of 1 January
2000. As of 1 October 2012 the new version (2012
version) of the harmonised system of coding goods
was introduced.
According to the Customs Code of the Republic of
Uzbekistan when goods (and transport vehicles) are
imported to Uzbekistan, the following customs
payments are charged:
 customs duty
 value added tax (VAT)
 excise tax (on excise-liable goods), and
 customs levies, including the customs clearance
fee.
The customs payments are to be paid by an importer
or a customs broker.
Customs payments are charged on:
 the customs value of the goods – for customs
duty, excise tax and customs levies, and
 the customs value of the goods, plus applicable
customs duty and excise tax (on excise-liable
goods) – for VAT.
In contrast to the import customs payment, export of
goods (works, services) is not subject to customs
duties that were abolished in 1997.
19
In accordance with the Tax Code of the Republic of
Uzbekistan, excise tax is not assessed on exports,
except for export of certain goods, the list of which is
determined by the Cabinet of Ministers, unless
otherwise provided by inter-governmental agreements
of the Republic of Uzbekistan.
VAT on export of goods (except precious metals) for
freely convertible currency, unless otherwise provided
by intergovernmental agreements, is charged at zero
rate. Export to the countries that are parties to the
bilateral agreements "On Principles of Indirect
Taxation for Exported and Imported Goods"
(currently Kazakhstan, Kyrgyzstan, Azerbaijan and
Moldova), is zero-rated, regardless of the currency of
payment and type of goods exported.
Valuation methods (Transfer Pricing at
Customs)
The customs value is determined by any of the
following valuation methods:
 valuation at the contract value (of imported
goods)
 valuation at the value of imported identical
goods
 valuation at the value of imported similar
goods
 valuation based on subtraction of values
 valuation based on addition of values, and
 reserve method valuation.
The common valuation method for determining the
customs value of the imported goods is valuation at
the contract value, whereby the customs value is
deemed the price paid/payable for the imported goods
as at the moment of customs clearance.
Tariff rates
Excise tax is charged as percentage of declared
customs value of the imported item or at fixed
amounts (e.g. cigarettes). The rates depend on the
type of imported items and may deviate significantly.
Examples of excise tax rates on goods imported in the
Republic of Uzbekistan are as follows:
 fruit/vegetable juices (except for pineapple and
citrus) – 70%, but not less than USD 1 per 1
litre
 mineral water – 100%, but not less than USD 1
per 1 litre
 cigarettes – USD 18.2 per 1,000 cigarettes
 air conditioners – 20%
 pet food – 70%
  oil and oil products –20%, but not less than
USD 0.32 per 1 litre
 vehicles – from USD 2.4 to USD 7.2 per cubic
centimetre of engine
 vehicle spare parts – 20%
 furniture – 50%.
VAT is charged on all imports at the standard rate of
20%.
The customs duty rates vary from 0% to 70%
depending on the type of goods.
Fixed rates are also set for certain goods as minimum,
e.g. malt beer rate is 30% but not less than USD 0.7
per litre. Examples of the customs duty rates are as
follows:
 alcohol – 30% but not less than USD 1 per litre
 cigarettes – 30% but not less that USD 5 per
1,000 cigarettes
 clothing – 10%-30%
 foodstuff – 5%-30%
 household appliances – 10%-30%
 furniture – 10%-30%, and
 motor vehicles – 30%-40% plus USD 1.2-3 per
cubic centimetre (depending on the engine
volume).
Application of the customs duties also depends on the
country of origin of imported items, in particular:
 No import customs duties are applied to import
of goods originated from members of the CIS
Free Trade Zone convention (i.e. Azerbaijan,
Belarus, Georgia, Kazakhstan, Kyrgyzstan,
Moldova, Russia, Tajikistan, Turkmenistan and
Ukraine).
 Import customs duties are applied at the
standard rates to import of goods originated
from countries which have been granted most
favoured nation status:
Europe Austria, Belgium, Bulgaria, Czech Republic,
Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Israel, Italy, Latvia,
Lithuania, Luxembourg, the Netherlands,
Poland, Portugal, Romania, Slovakia, Spain,
Sweden, Switzerland, United Kingdom,
Cyprus, Malta, Slovenia
Asia Bangladesh, China, India, Indonesia, Iran,
Japan, Jordan, South Korea, Malaysia,
Pakistan, Singapore, Turkey, Saudi Arabia,
Vietnam
20
America USA
Africa Egypt
 Import customs duties are payable at double
the standard rates on imports from all other
countries.
Effective 1 June 2002, there is a special procedure to
apply to goods and products imported by individuals
for commercial needs. Customs authorities define
whether goods and products are imported for
commercial needs, which is critical since no customs
duty would apply to imports for personal needs
provided that such imports do not exceed the
equivalent of USD 1,000 per person. This norm
however does not apply to imports by individuals
from neighbouring countries; such imports are
subject to a significantly lower norm.
Individuals importing goods and products for
commercial needs are subject to state registration as
individual entrepreneurs operating without
establishing a legal entity with the right to perform
import and export operations.
Tolling
Goods imported to Uzbekistan for processing and
further re-export are to be cleared under the special
customs regime ‘processing in the territory of the
Republic of Uzbekistan’. Goods imported under this
regime are to be processed under the customs
supervision.
After the imported goods have been processed in
Uzbekistan, they should be re-registered under
another customs regime along with the products of
their processing, i.e. for re-export or free circulation in
Uzbekistan. If the importer failed to re-register as
appropriate within 1 months (after the completion of
processing), the goods and products of their
processing may be withdrawn by the state.
Payment
The import customs payments are made during the
customs clearance of goods.
Producers can also defer the payment of their import
VAT in respect of material and technical resources
used for export-oriented production. The deferral is
granted for up to 90 days without application of any
interest.
Import relief
There are certain exemptions from the customs duties
and import VAT, for instance:
  goods imported by individuals within the
norms of duty-free import are exempt from
import duty and VAT
 property imported for production needs by
enterprises with foreign investment with
foreign participation in the equity not less than
33% is exempt from customs duty for the
period of 2 years from the state registration of
this enterprise
 medicines and medical equipment that cannot
be locally produced are exempt from import
duty and VAT
 goods imported by foreign legal entities whose
total direct investment to Uzbekistan have
comprised USD 50 mln and more are exempt
from customs duty, provided that the imported
goods are of their own production and are not
in the list of consumer goods
 goods imported by foreign investors for their
personal needs (and for personal needs of
foreign citizens residing in Uzbekistan in
accordance with labour contracts with the
foreign investors) are exempt from customs
duty, unless these goods are in the list of
consumer goods, and
 technological equipment named in a special list
is exempt from customs duty starting from 10
April 2007. The list contains over 90 groups of
items listed in sections 7, 8, and 9 of the
harmonised coding system applied in
Uzbekistan. The list specifically mentions that
customs incentives are applicable to spare
parts to technological equipment provided that
such spare parts are supplied along with the
equipment in accordance with the contracts.
As of 1 April 2013 in order to apply benefits on
customs payments, an importer-legal entity should
provide a copy of export customs declaration for
confirmation customs value of imported goods.
Documentation and procedures
Registration of import/export contracts
The following import contracts are subject to
obligatory expertise with the Ministry of Foreign
Economic Relations, Investment and Trade
(MFERIT):
 financed from the state budget
 financed by the loans attracted or guaranteed
by the Republic of Uzbekistan, or
 concluded by business entities with at least
50% of the charter capital held by the state
which do not have sufficient hard currency
resources.
21
MFERIT is also authorised to perform obligatory
registration of export contracts for the export of
certain listed goods (military, jewellery, uranium,
metals, crude oil, cotton yarn), unless such goods are
exported through the commodity exchange or by the
companies-producers.
The list of documents required for the MFERIT
registration/expertise includes:
 standard application
 original of the contract and its copy
 legal opinion on the contract commenting on
its compliance with the requirements of the
Uzbek legislation in cases when the contract
value exceeds 200 times the minimum monthly
wage (MMW) which is approximately USD
9,000 at the time of writing, and
 contract pricing substantiation with relevant
supporting documents.
Contracts for the import of certain goods (as per the
list set by the legislation) are also subject to pre-
shipment inspection which is to be performed by
special consulting companies accredited with the state
standardisation agency “Uzstandart”. Such expertise
is not required for contracts with the value less than
USD 10,000 and contracts for the import of goods
subject to licensing.
Customs cargo declaration
All goods imported in / exported from the Republic of
Uzbekistan, as well as electricity crossing the customs
border of Uzbekistan and oil/gas transported through
the pipelines are subject to customs clearance with
completion of a standard customs cargo declaration.
The customs cargo declaration should be completed
and filed with the customs authorities prior to or
within 15 days after the respective goods arrive(d) at
the customs territory of Uzbekistan.
As mentioned earlier in this section, the customs
authorities may challenge the declared value of the
goods. In this case they would determine the customs
value based on any of the valuation methods.
There were few legislative acts issued in 2011
abolishing certain permit obtaining procedures, e.g.
procedure for obtaining a ‘passport of import
transaction’ and certificate on registration of
import/export contracts; obtaining of registration
card of import operations were abolished etc.
Preliminary/periodic customs declarations
Resolution of the State Custom Committee issued in
January 2013 provides an opportunity to submit
preliminary customs declaration, i.e. submit
declaration prior to actual arrival of imported goods
to Uzbekistan. Another Resolution of the State
Customs Committee also issued in January 2013
provides that periodic customs declarations can be
filed in cases where similar goods are regularly
imported by the same person, i.e. if the same type of
goods are imported more than one time within 60
(sixty) calendar days from the same consignor to the
same consignee under the same contract/terms.
9. free customs zone, when goods are imported for
use within specific zones with no customs
payments charged
10. free warehouse (is similar to the free customs
zone regime)
11. duty-free shop, when imported goods are placed
to and sold from specialised shops with no
customs payments charged
12. processing on the customs territory, when goods
are imported for processing under the customs
supervision with no customs payments charged if
the goods or products of their processing are
further re-exported

Both Resolutions provide that preliminary/periodic
customs declarations cannot be applied in respect of
goods:
 prohibited for importation to Uzbekistan
 subject to licensing, or
 that require obtaining a permit from
authorities (except for certificate of conformity,
sanitary, veterinary certificates etc.).
Customs regimes
The Uzbek Customs Code stipulates 15 customs
regimes:
13. processing outside of the customs territory, when
goods are exported from Uzbekistan for
processing with no customs payments charged
(the goods and products of their processing are
subject to re-import to Uzbekistan and clearance
under the free circulation regime subject to the
customs payments)
14. destruction, when imported goods are destroyed
under the customs supervision with no customs
payments charged, and
15. refusal in favour of the state, when the importer
refuses the goods in favour of the state with no
customs payments charged.

1. free circulation (import), when goods are

imported for free circulation in Uzbekistan with
no obligation of further re-export; these goods
are subject to the customs payments
2. re-import, when goods previously exported from
Uzbekistan are re-imported to the republic with
no customs payments charged
3. export, when goods are exported from Uzbekistan
with no obligation of further re-import
4. re-export, when previously imported goods are
re-exported (on certain conditions, the import
customs payments can be refunded)
5. transit, when goods are passing the customs
territory of Uzbekistan under the customs
supervision with no customs payments charged
6. temporary import (export), when goods are
imported (exported) to Uzbekistan on a
temporary basis with obligation for re-export and
partial/full exemption from the customs
payments
7. temporary storage, when imported goods are
stored prior to their clearance under another
regime (not to exceed in general 2 months) with
no customs payments charged
8. customs (bonded) warehouse, when imported
goods or goods to be exported are placed to a
warehouse under the customs supervision with
no customs payments charged

22
Business entities

Investor considerations

 Foreign investment can be made in the form of participation in charter capital (equity) of business entities and
partnerships, banks, insurance companies and other entities established jointly with Uzbek legal entities or
individuals
 Foreign investment can be made in the form of acquisition of concession rights including rights for exploration
and development of natural resources
 Foreign investments can be made in the form of acquisition of a right for exploration, prospecting and mining
of mineral resources under production sharing agreements
 New edition of the Law on Joint Stock Societies was introduced in 2014
 One-window registration of companies
 ’Branch’ option of the legal set up is not available for foreign companies
 Dividends or profits distribution is restricted in cases when “net assets” are less than charter capital

Limited liability societies

Legal framework
The Uzbek company law system consists of the Civil
Code and a series of separate laws governing joint-
stock societies, limited liability societies, business
partnerships and private enterprises.
Commercial activity of business entities is also subject
to the law on legal contractual basis of activities of
business entities setting the requirements for
contracts preparation, conclusion and fulfilment.
Forms of business entities
Foreign investors may choose from a number of
different forms of organisation to conduct business
and business-related activities in Uzbekistan,
including: limited liability societies, joint stock
societies, partnerships, subsidiaries, representative
offices and branches of foreign enterprises.
According to the Civil Code of the Republic of
Uzbekistan, founders/participants of a legal entity or
owners of its property are generally not responsible
for liabilities of the legal entity. Such responsibility
arises when these persons’ or a parent entity’s actions
have led to insolvency (bankruptcy) of this legal
entity.
Open joint stock societies, entities with state
participation and enterprises engaged in insurance,
banking, stock and commodity exchanges, investment
funds and other financial institutions are subject to
mandatory annual audit by an independent audit
company.
Limited liability societies are governed by the Law on
Societies, #310-II of 6 December 2001, enforced from
1 March 2002. Limited liability societies are
considered separate legal entities and may be
established by one or several founders. The founders'
financial liability is generally limited to their
contribution to the owners’ equity (capital) of the
company.
The equity capital cannot be less than 40 times the
MMW. The equity capital should be contributed
within a term defined by foundation documents not to
exceed one year from the date of state registration.
A limited liability society does not issue shares, but
divides its charter capital amongst its participants.
A limited liability society may decide to distribute
profits on a quarterly, semi-annual and annual basis.
Distribution is restricted in a number of cases,
without limitation: when the charter capital has not
been paid in full; if at the moment of profits
distribution the society qualify as insolvent (or would
qualify as such as a result of profits distribution); if at
the moment of profits distribution the net assets of
the society are less (or would be less as a result of
profits distribution) than its charter capital and
reserves.
Joint stock societies
Joint stock societies are governed by the Law on Joint
Stock Societies and the Protection of Shareholder
Rights of 26 April 1996. Joint Stock Societies are
considered separate legal entities and may be
established by one or several founders.

23
New edition of the Law on Joint Stock Societies and
Protection of Shareholder’s Rights (Law) was
introduced with effect from 7 May 2014. We have
summarised the most notable amendments below.
 The new edition of the Law no longer contains
distinct concepts of open and closed joint stock
societies (JSS).
 JSS is granted with the right to determine the
place of its location in accordance with its
Charter (previously it was based on the place of
state registration). In addition JSS is now
obliged to have an email address and inform
the state registration authorities if it changes.
 Pre-emptive right can be provided based on the
Charter if the number of JSS’ shareholders
does not exceed 50. The term of exercise of the
pre-emptive right of the shareholders and (or)
JSS to repurchase the shares is reduced to a
minimum of 10 and maximum of 30 days from
the date of written notice of the exiting
shareholder (previously, from 30 to 60 days).
 The decision of the Constituent Assembly
should be formalised by the protocol signed by
all founders of JSS. In JSS with a single
founder Constituent Assembly is not
conducted.
 The term for preparation and approval at the
General Meeting of Shareholders of the
Regulation on the Supervisory Board,
Executive Body and the Audit Committee
(Auditor) is decreases to 3 months from the
date of state registration (previously, 6
months).
 The Law defines that the Charter Capital
(authorised fund) of JSS comprises of the
nominal value of shares acquired by the
shareholders expressed in the national
currency of the Republic of Uzbekistan.
 Minimum Charter Capital remains at the level
of equivalent of USD 400,000 at the Central
Bank exchange rate. However, the maximum
nominal value of a share is established as UZS
5,000.
The equity capital should be contributed within a term
defined by foundation documents not to exceed one
year from the date of state registration.
There is no concept of a "shelf" company in
Uzbekistan. The financial liability of shareholders is
generally limited to their contribution to the owners’
equity (capital) of the company.
Joint stock societies must create a reserve fund. The
declared reserve fund cannot be less than 15% of the
entity's charter capital and the annual allocation to it
24
should not be less than 5% of the entity's net profits
until the reserve fund equals the amount declared in
the charter. Joint stock societies can use the reserve
fund only for limited purposes (e.g. recovery of losses,
redemption of debentures, payment of dividends on
preferred shares).
A joint stock society may decide to distribute profits
on a quarterly, semi-annual and annual basis.
Decision for paying quarterly, semi-annual and
annual dividends is passed at the general shareholders
meeting at the recommendation of the supervisory
board. The amount of dividends cannot exceed the
amount recommended by the supervisory board.
Dividends cannot be paid if it may worsen the
financial position of the society.
Dividends are paid from the net profits of the society
for a respective period and/or undistributed profits
for prior periods. Dividends on preferred shares may
also be paid from the reserve fund.
Presidential Decree No. ПП-2454 of 21 December
2015 requires joint-stock societies (except those
engaged in production and processing of strategic
materials as well as natural monopolies and suppliers
of socially-important goods and services with
regulated tariffs) to have at least 15% of foreign
shareholding by 1 July 2016. Joint-stock societies
(JSS) that do not comply with the above requirement
shall be reorganised into other legal forms.
The Resolution No. УП-3594 of 11 April 2015 exempts
foreign investors from taxation of dividend income
until 1 January 2020. Until the same date JSSs are
exempt from payment of state duties for application to
the court in case of violation of legal rights and
interests with their further collection from the party in
fault.
Partnerships
Partnerships are governed by the Law on
Partnerships, #308-II of 6 December 2001.
Partnerships are considered to be legal entities.
The minimum charter capital is established to be not
less than 50 times the MMW. The foundation capital
should be contributed within a term defined by
foundation documents not to exceed one year from
the moment of state registration.
Profits and losses of a partnership are distributed
among its partners in a proportion to their respective
participation share in the charter capital, unless
otherwise established in the foundation agreement.
Profits cannot be distributed if the net assets of the
partnership are less than its charter capital.
There are two types of partnership - limited
partnerships and general partnerships - both must
have at least two founders. A limited partnership
must have at least one general partner, who has
unlimited liability for partnership debts. The liability
of other partners is limited to the amount of their
investment. In a general partnership, all partners
have unlimited liability. Both types of partnership are
taxed in the same manner as companies.
Subsidiaries
According to the Civil Code of the Republic of
Uzbekistan, subsidiaries are viewed as separate legal
entities. A subsidiary is established by a parent
economic society, provided that the latter, by force of
its participation in the charter fund or appropriate
agreement may influence decision-making process of
the subsidiary. A subsidiary does not hold
responsibility for any liability of its parent.
Representative offices
Representative offices of foreign companies are not
viewed as separate legal entities in accordance with
the Civil Code of the Republic of Uzbekistan. These
are used to gather information, to establish business
contacts, conduct marketing research, etc. The
representative offices are prohibited from engaging in
any commercial (income-generating) activity.
As of 1 January 2012 the Regulation on accreditation
and activities of representative offices of foreign
companies in the territory of Uzbekistan was
amended to allow the representative offices of foreign
airline companies to carry out commercial activities
provided that they additionally register as permanent
establishments.
Effective 1 January 2012 accreditation of the
representative office is performed for a fee in the
amount of USD 1,200.
Branches
According to the Civil Code, branches of legal entities
can carry out all the functions of a legal entity, without
constituting a separate one. Branches of Uzbek legal
entities are generally established in remote (from the
head office) location(s) to allow local presence; they
operate under special branch regulation which is
developed by the principal entity. The regulation
defines the framework of the branch’s operation; it
stipulates that the branch is not a separate legal entity
and does not have own assets, balance sheet, etc.
However, in practice, this business form is not applied
to foreign legal entities. It may be due to a lack of
legislative guidance in respect of registering a branch
of an entity which does not, by its own, have a
registration in Uzbekistan.
25
Foreign legal entities
A foreign legal entity (FLE) may perform certain
business activities in Uzbekistan without
establishment of an Uzbek legal entity.
If their activities meet criteria established for
Permanent Establishment (PE), they should register
with tax authorities as tax payers. PE is a pure tax
status without any legal form of ownership.
PE is generally subject to corporate income (profits)
tax charged in the same manner as applicable for
Uzbek legal entities and certain other taxes described
further in this Guide.
PEs of FLEs are allowed to open and operate bank
accounts in Uzbekistan commercial banks.
Joint activities
Contracts governing joint activities are not considered
to have a separate legal identity but may be used to
facilitate certain business purposes.
Registration requirements
Enterprises have to apply to a relevant state authority
responsible for its statutory registration. Following
the statutory registration with the relevant authority,
the latter becomes responsible for the subsequent
registration of the enterprise with tax and statistics
authorities, Road Fund, Labour, Employment and
Social Security Departments and receiving permission
from the Ministry of Internal Affairs for the enterprise
to produce a seal and a stamp.
Registration responsibilities are split among the
Ministry of Justice, Khokimiyats (local authorities)
and Central Bank of districts and cities.
The Ministry of Justice is responsible for the
registration of audit and insurance organisations,
exchanges, enterprises with foreign investments and
market places (bazaars) created in Tashkent.
Khokimiyats of districts and cities are responsible for
the registration of all subjects of entrepreneurship,
including enterprises with foreign participation1,
except for those to be registered by the Ministry of
Justice.
Central Bank is responsible for the registration of
commercial banks and representative offices of
foreign banks.
1Companies with participation of foreign capital, which do
not meet criteria set for enterprises with foreign investments
(please refer to criteria described in the Investment context
section above).

The total period of registration of the enterprise with
all the subsequent registration with tax and other
authorities may vary from 7 days to 1 month
depending on the complexity of each case.
State registration of enterprises with foreign
investment is subject to a registration fee of 5 times
the MMW plus USD 500. Joint stock societies
established with state participation are exempt from
the state registration fee.
Representative offices must be accredited with the
MFERIT. Similar to the incorporation of enterprises
with foreign investment, the accreditation of
representative offices is not in theory a long process to
pass. However, in practice the registration takes
approximately one month. Accreditation lasts for up
to three years, normally with prolongation carried out
on an annual basis.
Production sharing agreements
Law on Production Sharing Agreements (PSA)
specifies definitions and terms under which foreign
investors may enter into PSAs.
In particular, the Law stipulates that subsurface plots
to be explored under a PSA shall generally be limited
to those plots that have not been proven to have
natural resources stores. The proven natural
resources stores may be included in the PSA only in
cases when there is a lack of financial and technical
means for the exploration of such stores provided that
this is useful for the republic’s economy.
The Law also specifies procedure for entering a PSA.
As a general rule, subsurface plots should be provided
26
under PSA on a competitive bid basis. However, the
Cabinet of Ministers of the Republic of Uzbekistan
may adjust the procedure in certain cases, e.g. when
the bid for the field is participated in by one foreign
investor only. Activities under PSA are subject to
licensing with the Cabinet of Ministers. The license is
issued for the period of PSA validity.
Among the key terms of performing activities under a
PSA, there is a requirement that audits of financial
and economic activity and implementation of the
proposed budget be performed as of the end of
financial year at the expense of the foreign investor.
Reasonable expenses of foreign investors would be
reimbursed in the form of products. The
reimbursement should begin in the year when the
commercial extraction is launched. Reasonable
expenses that are not reimbursed in the current
calendar year can be reimbursed in the following
years within the period of duration of the agreement
subject to a limit to be set by the agreement. The term
‘reasonable’ shall not include taxes, insurance of
business or other risks, investor’s selling expenses,
fines and penalties.
Taxation of foreign investors under PSA is governed
by the Tax Code. Thus, the foreign investors will only
pay: income (profits) tax, land tax, signing bonus and
commercial discovery bonus, water use tax, unified
social payment, subsurface use tax and excise tax.
Customs payments shall not apply to import of goods,
works and services required for the purpose of PSA,
nor to the export of the investor’s share of production.
Labour relations and social security

Investor considerations

 To hire foreign employees a company in Uzbekistan must obtain a foreign labour license of the Agency on
Foreign Labour Migration under the Ministry of Labour and Social Protection; once the license is available, the
employer is to obtain work permits for each foreign employee
 There are quantitative limitations on foreign personnel attracted to work in Uzbekistan
 Taxpayer’s identification number should be obtained by foreign employees when they are deemed residents of
Uzbekistan for tax purposes
 Employer social security contribution accounts for 25% of payroll cost in 2016, including payroll of expatriate
personnel

Labour market It is recommended that job descriptions be given to all

Employment conditions for Uzbek national staff and
foreign personnel is governed by the Uzbekistan
Labour Code, the Law on Employment in Uzbekistan
and other normative acts, collective agreements and
employment contracts.
Employment contracts
staff, and that they be informed of the disciplinary
procedures in force at the enterprise.
Leave, work hours and benefits
The Labour Code specifies the minimum benefit
requirements, although most foreign enterprises
usually offer more advantageous packages.

Written employment contracts are compulsory and
are usually valid for an unlimited period. Fixed-term
contracts, either for five years or less, or for the
duration of a project, are possible under certain
conditions. A contract may include a three-month
probation period during which an employee may be
dismissed without a reason.
Dismissals
Notice of dismissal should be made in writing by
employers at least two months before dismissal in
case of staff reduction or liquidation of the employer,
or at least two weeks before dismissal in case when
the employee does not meet the job requirements due
to insufficient qualification or health condition.
Notice of dismissal under a fixed-term contract must
be provided within one week after the last day of the
contract, otherwise the contract will be regarded as
having been confirmed and the appointment made
permanent.
Labour agreement may be terminated at the
employee’s or employer’s initiative. In case of
dismissal by the employer, decision for the dismissal
should be explained by one of the following reasons:
staff reduction (liquidation of the employer), failure to
meet job requirements (due to insufficient
qualification or health condition), regular under-
performance of job duties, one-off case of gross
misconduct, termination of the agreement with a part-
timer with hiring a full-time employee, or termination
due to change of owner/management of the employer.
The minimum paid annual vacation is 15 working
days. Certain categories of employees (underage
workers, handicap employees) may receive extended
paid annual vacation of up to 30 working days.
Women are guaranteed up to 126 days (140 days in
cases of hard delivery or birth of two and more
children) of paid maternity leave. Women are entitled
to a one-off maternity allowance which is paid by the
employer. After the maternity leave women may take
a child care leave for up to two years and receive
monthly “child allowance”. Women may also take an
additional unpaid child care leave till child becomes 3
years old. They may also choose to work part-time or
from home for up to two years after the birth for
reduced pay. Leave for statutory holidays, paternity
leave and family bereavement leaves is also
mandatory.
The regular work week is 40 hours. For each hour of
overtime work, an employee must be compensated at
least at double of his/her normal hourly rate. There
are 9 official public holidays in Uzbekistan (please
refer to Annex B).
Uzbekistan enterprises must pay their Uzbekistan
employees in UZS. As of 1 September 2014 the
minimum monthly salary cannot be less than the first
level of the Unified tariff scale of wages, i.e. UZS
322,474 (approximately USD 110) at the time of
writing.

27
Unions
Employees have the right to strike and may join
labour unions. Yet, the incident of strikes is very low.
The rights and functions of trade unions are
determined by the Labour Code and a collective
agreement which is concluded between the employer
and the trade union on behalf of the employees.
The collective agreement provisions are binding for
the employer and the employees. Compliance of the
employer/employees with these provisions can be
inspected by the Ministry of Labour and Social
Protection.
Social security
Employees’ contributions
Like most other CIS countries, compulsory social
security charges are calculated and paid by employees
and employers on wages. In addition to personal
income tax (as described in the relevant section of this
Guide), employees are required to pay the following
amounts, charged as a percentage of their salaries:
 7.5% to the Pension Fund, 1% to the Trade
Union Federation Council (if an individual is a
member of any trade union).
Foreign personnel residing in Uzbekistan (i.e. those
who have permanent residency permit and permanent
registration) are subject to social charges to the
Pension Fund. Other foreign personnel are exempt
from the social charges, unless the benefits resulting
from such social contributions are to be claimed.
Such benefits include: pension, unemployment
allowance, disability allowance etc.
Employers’ contribution
Employers are subject to unified social payment
assessed on total payroll cost related to local and
expatriate staff. This payment is collected by the tax
authorities. The rate of unified social payment for
2016 is 25%. As of 1 Janury 2015 this rate was
reduced to 15% for micro-firms and small-size
companies offering a considerable saving which is
presecribed to be utilised for modernisation of
production and stimulation of staff.
The payment should be distributed by tax authorities
as follows:
 Pension Fund – 24.8% (14.8% for small
business)
 Employment Fund – 0.1%, and
 Trade Union Federation Council – 0.1%.
28
Besides paying their own payroll tax liability,
employers are required to withhold tax liability of
their staff at source and remit the amount of personal
income tax and other deductions (7.5 and 1%) to the
district tax authorities.
Employers must file quarterly reports on personal
income tax, with the tax authorities at place of
registration. Payments of personal income tax must
be made on the same date when cash for salary is
withdrawn from the bank. As of 1 January 2015
unified social payment and pension fund contribution
are reported on a monthly basis (previously reported
quarterly) and paid by 25th day following the reporting
month (previously paid by 10th day of the following
month).
As of 1 January 2012 income of foreign personnel paid
to non-resident legal entities as part of secondment
fees under personnel provision agreements is subject
to unified social payment. Taxable base for
calculation of unified social payment on such income
shall be the actual income of the foreign personnel
provided, but not less than 90% of the secondment fee
payable under the personnel provision agreement.
Cumulative pension system
Effective 1 January 2005, the Uzbek pension system
was supplemented with a new cumulative pension
mechanism. This mechanism implies obligatory
withholding by employers of 1% from the employees’
monthly employment income. However, this amount
withheld will decrease personal income tax liability
calculated from the same monthly employment
income.
Individuals or employers may also make voluntary
contributions to the cumulative pension fund. The
contributions (both obligatory and voluntary) are
accumulated and maintained by the Halq (People’s)
Bank of Uzbekistan.
Beneficiaries of the accumulated pension can
withdraw their pension funds when they reach
pension age determined by the legislation. The
withdrawal would be allowed based on a pension
certificate to be issued by a social security department
at the place of permanent residency.
The accumulated pension can be withdrawn prior to
the pension age in case (i) of beneficiary’s death when
his/her accumulated pension funds are inherited as
per relevant legislation; or (ii) if an individual
emigrates from the Republic of Uzbekistan.
Foreign personnel
Work permit and visas
Foreigners wishing to work for an Uzbek enterprise
(such enterprise should obtain a foreign labour license
prior to hiring foreign manpower) must possess a
valid entry visa and work permit. Foreign nationals
working for a representative office of a foreign
enterprise are not required to obtain work permit,
instead they should obtain an individual accreditation
card from MFERIT. Entry visa can be obtained from
a consular department of an Uzbek embassy in a
foreign country (where there is an Uzbek embassy).
Work permits are to be issued by the Agency on
Foreign Labour Migration under the Uzbek Ministry
of Labour.
Obtaining a work permit is subject to a state duty of
10 times the MMW (approximately USD 480). The
work permit is generally issued within one month.
Validity of the work permit is normally up to one year,
with possible renewal.
After the work permit is issued the inviting Uzbek
enterprise should apply to the Ministry of Internal
Affairs for an 'E2'-type working visa. The 'E2' visa’
cost depends on duration of the intended stay and
country of residence of the foreign national.
In order to obtain the visa the inviting Uzbek
enterprise would present a copy of the work permit
and standard application indicating personal
information on the foreign national and the
enterprise’s details (e.g. registration certificate and
permission to recruit foreign employees). The 'E2'
visa is generally issued within two weeks.
The foreign national would further obtain the ‘E2’
(with work permit) or ‘B1’ (with accreditation)
working visa. Dependents would also get special type
working visa which generally allows them to work in
Uzbekistan on certain conditions.
Income of foreign employees of joint-stock
companies, received for their activities as managerial
personnel shall be exempt from personal income tax,
unified social payment and pension fund
contributions.
Restrictions on employment of foreign
nationals
The Agency on Foreign Labour Migration under the
Uzbek Ministry of Labour and Social Protection sets
quantitative limitations for attracting foreign
personnel.
For instance, such limitation for works under PSA is
set at 20% of the total number of employees, and
attracting more foreign personnel is subject to a
condition that there should be no qualifying
specialists in the local population.
Fiscal registration number
Foreign nationals, including persons without
citizenship, are subject to mandatory registration and
obtaining a taxpayer’s identification number (TIN) if
their stay in Uzbekistan is 183 days and more in any
consecutive twelve-month period ending in the
current tax year, i.e. if they become residents of
Uzbekistan for personal income tax purposes.
TIN should be obtained from a local tax authority at
place of residence.

In case if foreign national is in Uzbekistan at the

moment of filing documents for work permit, such
documents are accepted if one of the following visa
types is available: labour visa “E”, business visas “B-
1”, “B-2” or service visa “S-3”.

For foreign nationals accredited with the MFERIT, an

accreditation card is a sufficient ground for working in
Uzbekistan, and neither work permit nor foreign
labour license is required. The “accredited” foreign
nationals would obtain a ‘B1’-type working visa issued
by the Ministry of Internal Affairs.

Foreign nationals arriving to work in Uzbekistan may

be accompanied by their family. Dependents would
get their entry visa along with the business visa issued
to the foreign national; documents for all family
members are submitted to the consular department of
an Uzbek embassy in a foreign country along with the
documents for the foreign national.

29
Accounting and audit requirements

Investor considerations

 Lack of reliable information

 Substantial differences between Uzbek accounting legislation and International Financial Reporting Standards
 Local accountants are not sufficiently qualified in International Financial Reporting Standards
 Independence of local audit firms is an issue
 Strict regulation of the banking activities by the Central Bank of Uzbekistan

Accounting principles in Uzbekistan

Accounting
Introduction of International Financial
Reporting Standards
The transition to International Financial Reporting
Standards (IFRS) is not legally enforced for all
organizational types in the country. However, all the
banks operating in the country are legally bound by
the Central Bank of Uzbekistan (CBU) to produce
IFRS financial statements on an annual basis, while it
may be complex for some of the local accountants who
have been working for a long time with a different set
of accounts and principles and might need time to
change their accounting mindset.
According to Presidential Decree No.УП-4720 of 24
April 2015 aiming at creation of favourable conditions
for attraction of direct foreign investments and
implementation of modern methods of corporate
management, during the period of 2015-2018 all
joint-stock companies should start publishing annual
financial statements prepared in accordance with
International Financial Reporting Standards. Audit of
such financial statements should be performed as per
International Auditing Standards.
Statutory accounting reports are still essentially
produced to enable the authorities to assess the tax
liability of an enterprise, and accounting is primarily a
matter for the legal classification of transactions and
provision of supporting documentary evidence.
Accountants are not expected to exercise the degree of
professional judgement that is a feature of western
accounting practice. Most potential investors restate
the accounts of the enterprises in which they are
considering investing in accordance with IFRS or
another national or group standard so as to portray an
understandable and meaningful financial position of
an enterprise.
Non-financial entities
Accounting and reporting procedures are regulated by
the accounting legislation of Uzbekistan, including
National Accounting Standards of the Republic of
Uzbekistan (NAS), which are published by the
Ministry of Finance of the Republic of Uzbekistan.
When introduced NAS were based on International
Accounting Standards (IAS); however, they are not
fully updated for the changes in IFRS.
Banks
Accounting and reporting procedures are regulated by
the CBU instructions as stipulated by Law #154-I “On
Central Bank of Uzbekistan” of 21 December 1995 and
Law #216-I “On banks and banking activities” of 25
April 1996.
Insurance companies
Accounting and reporting procedures are regulated by
the accounting legislation of Uzbekistan, including
NAS. Specifics of accounting for income and expenses
are regulated by Regulation “On cost composition”
#1517 of 18 October 2005. Insurance reserves are
regulated by Regulation “On insurance reserves of
insurers establishing a methodology of calculation
and procedure of formation and placement of
insurance reserves by insurers” (registered with the
Ministry of Justice under #1882 of 15 December
2008).
Statutory requirements
Accounting legislation imposes strict requirements for
maintenance of books and records, e.g. all records
must be supported by original source documents. In
practice tax authorities do not place any reliance on
audited statutory accounting reports. Requirement
for annual audits is regulated by Law #78-II “On audit
activities” of 26 May 2000.

30
Significant accounting differences between
Uzbekistan standards and IFRS
 joint stock societies
 banks and credit unions
Although NAS were based on IAS, statutory
accounting framework substantially differs from
 insurance companies
IFRS. The following are the examples of the areas of  investment funds
key differences between the Uzbekistan standards and  charity and other social funds financed by
IFRS, including accounting for and disclosure of: voluntary contributions of legal entities and
individuals
 financial instruments  non-budget funds financed by obligatory
 impairment of assets contributions of legal entities and individuals
 investments in subsidiaries, associates and  business entities with state share in their
joint ventures, and equity, and
 deferred tax.  stock and commodity exchanges.

Profile of the accounting profession

Auditing practice is regulated by the auditing

legislation of Uzbekistan, including National
Standards on Auditing (“NSA”). Main regulatory and
licensing bodies are the Ministry of Finance that
issues statutory general audit license and CBU that
issues statutory banking audit license. It is
mandatory to hold both licenses to perform bank
audits.

Local audit firms’ services are usually limited to audit

of statutory accounting reports, while one of the
purposes of such audits is to provide assurance over
an entity’s tax liability assessment.

Chart of accounts
Uzbekistan accounting legislation provides for two
types of chart of accounts: chart of accounts for
commercial banks registered by the Ministry of
Justice under #773-17 of 13 August 2004 and NAS #21
Chart of accounts for companies registered by the
Ministry of Justice under #1181-1 of 12 November
2003.

Audit requirements
There is NSA #70 Auditor’s report and auditor’s
opinion registered by the Ministry of Justice under
#1016 of 10 March 2001 that sets core requirements
for the content and form of auditor’s report and
opinion. Auditor’s report is a document summarising
audit findings and recommendations.

In April 2007 there was a new set of requirements for

audit companies introduced by President’s
Resolution. These included: minimum charter capital
and shareholding requirements, minimum number of
auditors with local qualification certificate, obligatory
rotation of the audit firm after three consequent years.

As per the Uzbek legislation, annual audit is

mandatory for the following types of entities:

31
Tax system and administration

Investor considerations

 Current Tax Code is enforced as of 1 January 2008, latest changes introduced on 25 April 2016
 Form driven tax environment
 General tendency towards decreasing the tax burden, although position of the tax authorities in practice is to
collect more taxes
 Network of 52 effective double tax treaties

be approximately in the range of 40-45%of the state

Tax system budget.

The fundamentals of the current Uzbekistan tax There are three major obligatory contributions levied
system were established as part of a key series of tax on the taxpayer – contributions to Road Fund,
reforms introduced during 1991. Since then the tax Pension Fund and Non-budget Fund on
system has been modified on numerous occasions and Reconstruction, Capital Repair and Equipment of
remains one of the complex aspects of the Uzbekistan Educational and Medical Institutions.
business environment.
These charges normally represent a considerable tax
The most notable modification of the tax system in the burden, as the underlying taxable base for all three
past few years is the introduction of a new Tax Code contributions is the taxpayer’s net revenue (revenue
as of 1 January 2008 (amended as of 25 April 2016). net of VAT and excise tax). The cumulative rate of the
The Tax Code has unified the underlying principles of above three contributions is 3.5% in 2016 (Pension
taxes and obligatory payments charged in Uzbekistan Fund- 1.6%, Educational Institutions Fund- 0.5%,
and practical guidance on calculation and payment Road Fund- 1.4%).
which had been previously set out by specific
instructions on each tax. Indirect tax group is another major contributor to the
state budget. The share of indirect tax contributions
State Tax Committee has not changed significantly over the past two years.
The Uzbekistan State Tax Committee (STC) is the This group includes the following indirect taxes:
focal government authority responsible for
administering the tax system, issuing instructions on State budget share*
the application of tax laws and providing guidance to Indirect Taxes (actual)
taxpayers. Main Tax Departments of Tashkent, 2014 2015
Republic of Karakalpakstan and 12 regions are direct Total 58.9% 58.5%
subordinates of the STC. There are also local tax VAT 33.1% 33.1%
authorities – Inspectorates. Excise 17.3% 17.1%
Customs duty 4.7% 4.5%
Registration requirements
Car petroleum and gas
3.8% 3.8%
Legal entities are required to register for tax purposes consumption tax
with local structural divisions State Tax Inspectorates *Share of state budget excluding contributions to designated state
of the STC at the district of the legal entity’s location funds
(legal address). These local State Tax Inspectorates
are responsible for collecting taxes and insuring the Direct taxes are not such significant state revenue
taxpayer’s compliance with the tax legislation. drivers as indirect taxes and contributions to the state
funds. The major direct tax contributor remains
Direct and indirect tax burden personal income tax.

Contributions to designated state funds comprise the

significant share in the state budget. Government
estimates for the last three year indicate this share to

32
 State budget share* the introduction of the new Tax Code have been
Direct Taxes (actual) abolished.
2014 2015
Total 26% 26.8% Taxes and obligatory payments are established by the
CIT, WHT 3.9% 3.6% Tax Code. Legislative acts dealing with tax matters
should be consistent with the Tax Code provisions,
Unified Tax Payment 6.7% 7.3%
otherwise they should be amended to comply with the
Personal Income Tax 11.4% 11.6%
Tax Code or would be viewed as invalid. The Tax
Fixed Taxes 1.9% 2.1%
Code defines that taxation is based on the legislation
Infrastructure effective at the moment when respective tax liabilities
2.0% 2.2%
Development tax arise. Legislative acts cannot be applied retroactively,
*Share of state budget excluding contributions to designated state unless they soften or eliminate liabilities.
funds
The Tax Code stipulates that all un-removable
Another important group is ‘resource’ and ‘property’ contradictions in the tax legislation should be treated
taxes. This group includes the following taxes: in favour of taxpayers.

Resource and
State budget share* Tax treaties
(actual)
property taxes In accordance with the Tax Code, international tax
2014 2015
treaties of the Republic of Uzbekistan prevail over the
Total 15.1% 14.7%
Uzbek domestic tax legislation.
Subsurface use tax 8.0% 7.7%
Property tax 4.5% 4.2% Uzbekistan has effective double tax treaties with 52
Land tax 2.3% 2.3% countries.
Water use tax 0.4% 0.5%
*Share of state budget excluding contributions to designated state In order to apply the provisions of a double tax treaty
funds one should undertake certain procedures provided by
the local legislation. An approval of relevant tax
In general, the Government tends to decrease the authorities has to be obtained before the provisions of
direct tax rates. The turnover charges (obligatory the double tax treaty can be exercised. Normally, the
contributions to the state funds) remain the key taxpayers have the rights to apply for withholding tax
discouraging factor in taxation of business entities. exemption, reduction of tax rate or refund of overpaid
tax based on the provisions of particular double tax
Principal taxes treaty.

The main taxes affecting foreign investors in 2016 are
the following:
 CIT, including income tax withheld at the
source of payment (withholding tax), and
infrastructure development tax
 value-added tax and turnover charges
 personal income tax and other payroll charges
 customs duties, and
 other taxes and charges (e.g. subsurface use
tax, excise tax, property tax, net profits tax for
permanent establishments, excess profits tax
for subsurface users, land tax, water use tax
and other local taxes and charges).
Legislative framework
Uzbekistan tax legislation is based on the statute law.
The main document regulating taxation is the Tax
Code of the Republic of Uzbekistan. The Tax Code
unified main taxation principles and the practical
aspects of taxation. Separate instructions for
calculating and payment of each tax effective prior to
However, the tax authorities might be quite reluctant
to approve the tax reliefs per double tax treaty
provisions.
As of 1 January 2014 income of nonresidents in the
form of dividends, interest and royalty is to be paid
without withholding of tax at source or with
application of a reduced withholding tax rate as
provided by the tax treaty, provided that there is a tax
certificate confirming that nonresidents are registered
for tax purposes in the state with which Uzbekistan
has the effective tax treaty. Previously, such
exemption / rate reduction used to be granted
through a preliminary approval by the Uzbek tax
authorities. As of 1 January 2015 preliminary
approval was also abolished in in respect to other
types of income (e.g. income from services, insurance
premiums, rent income etc.) and automatic
exemption/ rate reduction applies for such income.
Notwithstanding the above, preliminary approval by
the tax authorities shall still be required for WHT
exemption for the following types of income:

33
  income from joint activity carried out based on
the simple partnership agreement, and
 income from disposal of goods owned by
nonresident which are being disposed by
nonresident itself or by resident of Uzbekistan
based on the commission/agency agreement.
Tax returns and payments
The Uzbekistan tax legislation provides different filing
requirements for different taxes and taxpayers.
Generally, filing requirements can be divided into two
groups: i) simplified tax regime; ii) standard tax
regime. The tax returns are independently compiled
and filed by the taxpayers.
Simplified tax regime
Under the simplified tax regime, applicable to micro-
firms, small enterprises and entities carrying out
specific activities (e.g. catering, trading), the filing
requirements are minimal. Such entities are subject
to Unified tax payment and submit quarterly tax
returns not later than 25th day of the month following
the reporting quarter. Annual tax returns are to be
filed by 15th of February of the year following the
reporting year.
As of 2016, the mimimum rate of Unified tax payment
is reduced to 5% from 6% in 2015.
Unified tax payments are based on the assessments
made by the taxpayers in the tax returns. Payments
are remitted to the tax authorities by micro firms and
small enterprises not later than the filing deadlines
described above. Other entities subject to Unified tax
payment shall remit monthly payments no later than
25th day of the following month.
As of 1 January 2009, privatised micro-firms and
small companies – payers of the Unified tax payment
– with sales turnover for the last two quarters being
less than ten times the amount of property tax and
land tax that could have been charged under the
standard tax regime are to switch to the standard tax
regime and pay all taxes in the established order. As
of 1 July 2011 a minimum amount of Unified tax
payment due was introduced. The minimum amount
comprises triple amount of land tax charged on
taxable land used by the taxpayer.
Standard tax regime
Taxpayers in this category have to deal with rather
complex filing requirements. Standard tax regime
entails payment of an array of taxes and obligatory
contributions, most of which have different filing and
payment deadlines and procedures. Some taxes, such
as CIT and Property tax, require filing of provisional
tax returns and payment of tax advances, whereas
other taxes are reported and paid on the basis of the
34
taxpayer’s actual assessments. For the purpose of this
Guide, we only discuss the taxes that represent
significant tax burden for taxpayers.
CIT is reported on a quarterly basis. Provisional
quarterly return is submitted by 10th day of the first
month of the reporting quarter. Based on the
provisional return, taxpayers make advance payments
of 1/3 of the reported amount by 10th day of each
month in the reporting quarter. Enterprises with
foreign investments file final quarterly returns by 25th
day of the month following the reporting quarter and
final annual return by 25 March of the year following
the reporting year. Should the CIT advance payments
deviate by more than 10% from the actual tax liability
declared based on the quarterly report, the tax
authorities may impose late payment interest on the
difference (if the amount of the advance payments is
less than the actual liability).
CIT and net profits tax payable by permanent
establishments should be reported once a year
(without advance payments) before 25 March of the
year following the reporting one. Taxes are paid
within a month from the reporting deadline.
VAT returns are submitted on a quarterly basis by
25th day of the month following the reporting quarter.
VAT return of the taxpayer should be supplemented
with a register of VAT invoices in respect of goods
(works/services) purchased and sold in the reporting
year. The payments by micro firms and small
enterprises are made not later than filing deadlines.
Other entities make monthly payments not later than
25th day of the following month.
As of 1 January 2013 Property tax is reported on an
annual basis. Taxpayers submit provisional annual
tax return by 10 January of the reporting year.
Advance payments of 1/4 of the annual amount of the
provisional return are made quarterly by micro firms
and small enterprises not later than 25th day of the
month following each third month. Advance
payments of 1/12 of the annual amount of the
provisional return are made by other entities monthly
not later than 10th day of each month Final annual
return is submitted by 25 March (for enterprises with
foreign investment) or by 15 February (for other
taxpayers) of the year following the reporting year.
Permanent establishments of the foreign legal entities
should submit information on taxable property to the
tax authorities by 25 January following the reporting
year. As of 1 January 2010, the property tax is to be
computed based on that information by the tax
authorities within 10 days after the submission date.
Obligatory contributions (Turnover charges) are
made to non-budget designated funds and are
equated to taxes. As of 1 January 2013 tax returns on
the Turnover charges are filed on a quarterly basis–
by 25th day of the month following the reporting
quarter. Payments are made – by micro firms and
small enterprises – along with the return submission;
and by other taxpayers - on a monthly basis by 25th
day of the following month.
Micro firms and small enterprises paying taxes under
the standard tax regime (except enterprises producing
excisable goods and extracting mineral products
subject to subsurface use tax) are not subject to
obligatory contributions to Pension Fund and Road
Fund.
Overpaid taxes
In the event of overpayment of taxes by taxpayer
(when tax amount paid exceeds the tax liability), the
enterprise has the right to appeal to the relevant local
tax authority for offset of the overpaid amount against
penalties (related to this tax), current liabilities on
other taxes or future tax liabilities.
If the overpayment has not been fully settled through
the offset, it can be claimed for refund from the
budget. The claim for refund should be in written
form and supported by a confirmation from the tax
authorities. The overpayment should be refunded
within 30 days after the claim filing.
Withholding taxes
A foreign legal entity receiving income from Uzbek
sources without creation of a permanent
establishment in Uzbekistan is subject to income
(profits) tax withholding at source at the rates
provided in Appendix C with no deductions of
expenses.
According to the Tax Code, the following types of
income, without limitation, are viewed as subject to
Uzbek income tax withholding:
 dividends, interest
 income of foreign legal entities from joint
activity in Uzbekistan (simple partnership)
 capital gains
 royalty income
 rental/sub-rental fees
 insurance premium
 telecommunication fees
 income from transportation, freight-forwarding
services
 fines and late payment interest for breach of
contractual obligations
 property received free of charge, and
 other income from provision of services in the
Republic of Uzbekistan.
35
Uzbek legal entity, as well as FLE carrying out activity
in Uzbekistan via PE, paying out the income to non-
resident (withholding agent) are obliged to withhold
the tax and remit it to the state budget not later than
the time of income payment (except for banks that are
permitted to remit the tax to the state budget before
the 5th day of the month following the month when the
payment is made).
Article “Specifics of taxation of income of non-
residents of Uzbekistan received from alienation of
property”shall apply in cases when shares
(participation interest) in charter capital of an Uzbek
company or real estate are sold by one nonresident to
another nonresident company or individual.
The obligation on withholding and payment of tax on
income resulting from such disposal is imposed on the
buyer that would be viewed as tax agent. Taxable
basis shall comprise the difference between the sales
price and the acquisition price (in case the acquisition
price cannot be determined, it would be the inventory
value of the asset to be subtracted from the sales
price).
The rates of withholding tax may be reduced under
the terms of double tax treaties as described in the
relevant section of this Guide.
Tax Audits
Scheduled statutory tax audits are to be carried out
once in three years (once in four years for micro-
firms, small enterprises) by the tax authority of the
district where the enterprise is registered, i.e. district
Tax Inspectorates. However, in certain cases the tax
audit is undertaken by the STC, which is the highest
tax authority.
Tax authorities should notify the taxpayer in writing
on planned tax audit not less than 30 days prior to
start of the audit, indicating the period and subject of
the audit.
The tax audits are aimed at verification of the tax
returns submitted by the taxpayer. Normally the tax
authorities would review the accounting records,
copies of tax returns and source documents as
required.
There can also be un-scheduled tax audits – e.g. in
case of liquidation of the enterprise, and counter tax
audits – to review transactions with the enterprise’s
supplier/customer which is under the scheduled tax
audit.
In case of tax breaches revealed during tax audits,
taxpayers should remove tax violations and pay
respective taxes/obligatory payments and late
payment interest within 30 days after the tax
authority’s decision is released. If accomplished
within the deadline, the tax authority’s decision on
applying penalty may be cancelled. If not
accomplished, the unpaid taxes/obligatory payments
and late payment interest are to be withdrawn from 1
– the taxpayer’s bank accounts (by issuing tax liability
claim without acceptance), 2 – taxpayer’s debtors (by
issuing tax liability claim on the debts payable to
taxpayer), 3 – taxpayer’s property (by issuing tax
liability claim upon decision of the court).
Another form of monitoring accuracy and
completeness of fulfilment of tax liabilities imposed
by the tax authorities is ‘cameral control’, which is
performed at the time of tax returns submission. The
tax authorities may require the taxpayer to amend the
tax return(s) if they have revealed mistakes or
inconsistencies therein. The amended tax returns
should be filed within 10 days.
Penalties
Fines and interest may be applied if a taxpayer is
found to have breached the tax regulations. For
example:
 Failure to register for tax purposes results in
the fine of 50 times the MMW but not less than
10% of net revenue received from such activity
without registration (in case of late registration
by no more than 30 days from the prescribed
date) and 100 times MMW but not less than
50% of net revenue received from activity
without registration, (in case of late
registration by more than 30 days from the
prescribed date).
 20% of concealed or understated revenue from
sales of goods and services is subject to
confiscation.
 Interest is charged for late payment at the rate
of 0.033% (prior to October 2011 the interest
rate was 0.05%) of the outstanding liability per
day.
 Reflection in an invoice of VAT amount by a
supplier which is not the VAT payer leads to
imposition of a fine to the supplier equal to
120% of the VAT amount shown.
 For the failure to use cash register machines
and terminals for prepaid plastic cards (where
use of terminals is obligatory) when selling
goods or providing services, as well as failure to
issue checks, receipts, etc. required by
regulations, the fine is levied in the amount of
up to 50 MMW. If the same is repeated within
one year from the date when the first fine was
imposed, the fine is levied in the amount of up
to 100 MMW. Use of technically inadequate or
36
manipulated cash machines, as well as refusal
to accept settlement by prepaid plastic card is
subject to the fine of up to 200 MMW.
 Use of land plots in excess of plot square
defined in appropriate documents is fined at 2
times higher rate for legal entities and 1.5 times
higher rate for individuals of the land tax
amount.
 Taxpayer’s bank accounts could be “frozen”
for the following reasons: (i) failure to submit
within 15 days after due date of tax and/or
financial returns by the taxpayer, and (ii)
absence of the taxpayer at its legal address.
As of September 2014 tax authorities have
been limited in right to ‘freeze’ taxpayers’
bank accounts, whereas it can only be done
upon a court decision.
If taxpayer (legal entity) is in dispute with the
assessment of tax liabilities and financial sanctions, a
claim can be filed to the higher tax authority, i.e. the
STI.
Taxpayer may also file a claim with the court. Filing
the claim with the court or higher tax authority would
suspend withdrawal of the tax liabilities and sanctions
in dispute; these can be executed, if at all, by the court
decision, which should be issued within 30 days or
decision of the higher tax authority. When filing the
claim with the court or higher tax authority, the
taxpayer should notify the tax authorities accordingly.
As of October 2013, penalties previously applied to
legal entities in the following cases have been
excluded from the Tax Code:
 Failure to maintain accounting or inadequate
maintenance of accounting. Responsibility for
such law breach is shifted onto responsible
officer(s) of the taxpayer (under Administrative
Code).
 Carrying out activities without the respective
license. Similarly, responsibility for such law
breach is shifted onto responsible officer(s) of
the taxpayer (under Administrative and/or
Criminal Code).
Taxation of corporations
Investor considerations
 Five-year tax loss carry forward
 Transfer pricing adjustments can be made by the tax authorities in related parties’ commercial and financial
arrangements
 Obligatory contributions to designated funds assessed from turnover are significant
 Special taxes for subsurface users
Corporate tax system
Taxable entities
The following entities are generally subject to CIT in
Uzbekistan:
 Uzbek legal entities, including entities with
foreign investments, and
 Foreign legal entities carrying on activity in
Uzbekistan via permanent establishment or
receiving income from sources in Uzbekistan.
Territoriality
Uzbek legal entities, including entities with foreign
investment and their branches outside the Republic
are taxable on worldwide profits. FLEs carrying out
their activity in Uzbekistan are only taxable on their
profits from activities performed in the Republic of
Uzbekistan.
Permanent Establishments / Branches
The concept of PE in Uzbekistan is used solely for tax
purposes. PEs of FLEs are not considered as separate
legal entities. Requirements for registration of PEs of
foreign legal entities extend to tax registration only, as
such may allow the tax authorities to tax profits of
FLEs attributable to their PEs in Uzbekistan. As of 1
January 2010, PEs are allowed to operate bank
accounts and have official stamps. Starting 1 January
2015 FLEs carrying out activities in Uzbekistan
through PEs are eligible to import (and clear through
customs) goods for implementation of their projects.
In general, for tax purposes a PE of FLE in Uzbekistan
is deemed to be any place of entrepreneurial activity
in the territory of Uzbekistan, including activity
through an authorised person. The Uzbek PE would
also be deemed as existing as a result of
entrepreneurial activities carried on in Uzbekistan for
183 days and longer during any consecutive 12-month
period.
37
PEs are subject to CIT (7.5%) as normal Uzbek
enterprises with certain peculiarities as discussed
further. CIT basis of PEs also income net profits (i.e.
profits retained after payment of CIT) and this part is
taxed at 10%.
Branches of Uzbek legal entities are generally taxed at
the head office level, except for local taxes, such as
property tax or land tax. As noted earlier in this
Guide, the branch concept is not applied for FLEs.
Taxable income
Taxable profits include trading profit, capital gains,
profits from financial activities and other profit items.
The taxable profit of an Uzbek enterprise is based on
statutory accounting profits, adjusted for specific
items. All Uzbek enterprises are required to maintain
their accounts in accordance with accounting
regulations that primarily facilitate tax accounting.
The list of expenses that may be deductible for tax
purposes is also set by the legislation. According to
the Law on Accounting, as from 1 January 1998
enterprises must account for both revenue and
expenditure on an accrual basis. This norm also
extends to the tax accounting. The accounting period
for both tax and statutory accounting purposes is a
calendar year.
Tax treatment of entities with foreign investment is
broadly similar to other Uzbek legal entities.
A FLE that is considered to have a taxable PE in
Uzbekistan is subject to taxation in respect of the
portion of profits relating to the business activity in
Uzbekistan. In order to determine the portion related
to the activity in Uzbekistan, the PE is obliged to
maintain limited book-keeping records.
If a foreign enterprise derives income from sources in
Uzbekistan, but does not carry on activities that lead
to creation of an Uzbek taxable PE, it becomes subject
to CIT through withholding at source (please refer to
the relevant section of this Guide). Income from
services provided outside Uzbekistan is not
considered as Uzbek-sourced income, and thus, is not
subject to income tax withholding.
When determining taxable income of a FLE carrying
on activities in Uzbekistan via PE, taxable base should
not be less than 10% of total expenses directly related
to income generating activities in the Republic of
Uzbekistan through the PE, whether incurred in or
outside Uzbekistan.
Deductibility of expenses
Most types of expenses are deductible for tax
purposes. PEs are eligible to deduct expenses
incurred outside of Uzbekistan if they directly relate
to their business in Uzbekistan. The Tax Code sets an
additional list of non-deductible expenses for PEs
which includes, among others: royalty and other
payments for the use of assets or intellectual property
of the FLE (head office); commission fees charged by
the head office; interest on loans provided by the head
office; management or administration costs incurred
by the head office outside of Uzbekistan.
Capital gains / losses
Capital gains arising from the disposal of tangible and
intangible assets are calculated as the difference
between the selling price and the net book value
(depreciated value) of an asset. The capital gain is
included in taxable profits, and capital losses are
deductible only if the disposed asset had been used for
business purposes for three or more years.
Staff remuneration
Salary paid to contracted employees is generally
deductible.
Taxes
All taxes, levies and obligatory charges to state
(republican and local) budget and non-budgetary
funds are deductible for tax purpose, except for
infrastructure development tax and net profits tax (for
PEs) which are assessed on profits after the payment
of CIT.
Depreciation
For tax purposes, depreciation/amortisation is
calculated with application of rates defined by the Tax
Code. If accelerated depreciation method is used in
accounting, the difference between the accounting
depreciation and tax depreciation is deferred to future
periods as a temporary difference.
Depreciation is calculated from the month following
the month when the asset was put into use until it is
fully depreciated, disposed or written off. The
maximum annual depreciation rates applicable to
38
different types of fixed assets and intangibles are
outlined in the table below.
Depreciable item Rate
Buildings and other structures: 5%
Cars, tractors, special equipment, 20%
computers and related hardware:
Lorries, buses, special cars and trucks,
industrial machinery and equipment, 15%
agricultural machinery and equipment,
oil extraction and mining equipment,
office furniture:
Railway, river and air transport vehicles,
thermo-technical equipment, turbines, 8%
electric and diesel drives, power supply
and communication lines, pipelines:
Depreciable assets not mentioned above: 15%
Intangible assets: Please
see below
Intangible assets, including leases and other property
rights, are amortised over the asset's useful life or the
period of activity of the enterprise, whichever is the
shorter. Where an asset's useful life cannot be
determined, the asset would be amortised over five
years.
Expenses related to geological exploration and
developmental works necessary for the extraction of
natural resources will be deductible for CIT purposes
through depreciation at the rate of 15% per annum.
For statutory accounting purposes fixed assets can be
depreciated using one of the following methods:
 straight-line
 production method.
In cases of intensive use of assets or substantial effect
of scientific and technical progress, the following
methods can also be applied:
 double declining balance method, or
 sum-of -the -years digits method.
Lease
Tax treatment is different for operating and capital
lease. For tax purposes, the criteria for lease to
consider as operating or capital are defined by the Tax
Code. A capital lease is treated by a lessee as a
purchase of a fixed asset and is subject to the normal
depreciation regime, whereas the fixed asset under
operating lease is accounted for by the lessor and the
lessee deducts lease payments for tax purposes.
Interest
Interest expense is deductible except for interest on
overdue and deferred loans or when such interest is
subject to capitalisation, e.g. interest on loans
attracted for the purchase/lease of fixed assets that is
to be included in the value of such fixed assets.
Losses
Losses arising from sale of goods (works/services)
below cost are non-deductible. Production wastes and
defects, losses resulting in force-majeure
circumstances are generally deductible. Losses from
fixed assets disposal can also be deducted, if the fixed
asset has been used for three and more years.
Loss carry forward
Tax losses (excess of deductible expenses over
aggregate income) can be carried forward for the
period of up to five years in equal amounts to reduce
taxable income (profits) in the years following the
reporting period when such loss occurred. The gross
amount of losses to be accounted for in each following
year cannot exceed 50% of taxable income (profits) of
the current year. Losses incurred in more than one
calendar year are recoverable in the order of their
occurrence. Losses incurred in the period when the
taxpayers were exempt from CIT cannot be recovered
in the following periods.
Non-deductible items
The following types of expenses might be treated as
partially/fully non-deductible, without limitation:
entertainment costs, voluntary insurance expenses are
restricted to (low) limits that are based on an
enterprise's turnover; in-kind benefits provided to
employees, bad debt provisions, tax penalties and
other fines, etc.
Related party transactions
As of 1 January 2010 a transfer pricing concept was
reintroduced in the Tax Code. Thus, the tax
authorities may adjust prices used by interrelated
parties in cases when these prices differ from the
prices which would have been set for independent
customers/suppliers. Interrelated parties are defined
as foreign parent companies and their Uzbekistan
subsidiaries, Uzbek parent companies and their
subsidiaries abroad, as well as Uzbek companies and
foreign companies that have the same shareholders.
There should be further guidelines elaborated by the
state authorities for practical implementation of the
concept.
Foreign exchange
According to the current accounting regulations,
taxpayers have option either to recognise exchange
39
losses as expense when incurred or defer such
recognition on the balance sheet until the loss is in
fact realised along with settlement of related hard
currency balance sheet items.
Tax computations and rates
CIT liability is computed by adjusting the income
before tax for non-deductible items, incentives and
allowances and applying the effective tax rate, which
could be reduced per applicable incentives.
Group consolidation for the purpose of CIT
computation and reporting is not allowed.
The CIT rate is set annually by presidential decree. In
2016, enterprises (i.e. legal entities) are generally
subject to CIT at the rate of 7.5%. Commercial banks
are subject to CIT at the rate of 15%.
As of 1 January 2016 companies providing mobile
services became taxable on excess profits through
differentiated CIT rates. Thus, CIT rates were set as
follows:
 if profitability lower than 20%, the corporate
income tax rate is 7.5%; and
 if profitability higher than 20%, the corporate
income tax rate 50% is charged on profits
exceeding 20% level of profitability.
Other taxes
Uzbek enterprises are also subject to several other
taxes.
Depending on the business activity carried on by the
enterprise the below mentioned taxes may or may not
represent significant tax burden for taxpayers.
Enterprises under a simplified tax regime are not
subject to these other taxes except for subsurface use
tax and excise taxes.
Excise tax
Excise tax is to be paid by all individuals and
enterprises that produce, import or export certain
products. The Cabinet of Ministers of Uzbekistan
established the list of products subject to excise taxes
and the applicable rates.
The following are examples of excise-liable goods
produced in Uzbekistan and applicable rates in 2016:
cognac, vodka and other strong alcohol drinks – up to
UZS 4,587.8 per 1 litre, beer – UZS 513.3 per 1 litre,
cigarettes with and without filter – UZS 28,794 per
1,000 cigarettes, petrol –UZS 321,430 – 408,890 per
1 tonne (depending on the petrol type), diesels –UZS
273,400 per 1 tonne, natural gas - 25%, jewellery –
25%, General Motors Uzbekistan cars – 29%.
As of 1 January 2012 retail trade of golden jewellery is
subject to excise tax of USD 10 for 1 gram of gold.
Products sold for export are exempt from excise tax,
except for goods specifically listed by the Cabinet of
Ministers of Uzbekistan as subject to excise.
Examples of such goods with respective excise tax
rates, as set by Resolution of the Cabinet of Ministers
#554 of 31 December 1999, are: cigarettes 50%,
alcohol 50%, paper 50%, construction materials 50%
home electronic appliances 50%, General Motors
Uzbekistan cars EUR 3 per 1 cubic centimetre etc.
These goods if exported by the manufacturers and
their official distributors for hard currency are not
subject to export excise tax.
Certain goods imported in the Republic of Uzbekistan
are also subject to import excise tax. For examples of
import excise rates please refer to the relevant section
of this Guide.
Property tax
Under the current legislation, property tax is imposed
on both individuals and enterprises. The property tax
rate in 2016 is 5% for legal entities.
The tax is assessed on residual value of the fixed
assets adjusted for the effect of revaluation, which
should be performed on an annual basis as at 1
January, value of overdue construction-in-progress
and equipment not installed in due time.
As of 1 January 2015 taxpayer that owns property
should also be registered with the tax authorities
where property is located (if different from place of
registration of the taxpayer), report and pay
respective taxes.
As of 1 January 2012, for the purposes of property tax,
a definition of ‘construction in progress’ is introduced
as objects not fully constructed within the timeframe
defined by construction documents; in the instances
where such timeframe is not specified - within 24
months from the beginning of construction. The
effective rate is doubled for equipment not installed in
due time. As of 1 January 2013 intangible assets are
excluded from the list of taxable property for the
purposes of property tax.
As of 1 January 2014, the list of non-taxable property
was amended to exclude the following: property of
legal entities used for needs of cultural, preschool and
secondary institutions; property of agricultural
enterprises; communication satellites; and property
received under a financial lease arrangement.
40
At the same time, the list was reworded to read that
non-taxable property shall include machinery and
equipment in use no more than 10 years (previously,
it included new technological equipment – for the
period of 5 years).
FLEs are also subject to property tax at the same rate
of 5%. Taxable base is determined as: for FLEs
operating in Uzbekistan via a permanent
establishment – fixed assets recorded in the books as
per the Uzbek accounting standards and real estate
owned by the FLEs; and for FLEs without permanent
establishment – real estate owned by the FLEs and
located in Uzbekistan. Information on taxable
property should be submitted by PEs to tax
authorities by 25 January following the reporting
year. As of 1 January 2010, the property tax is to be
computed based on that information by the tax
authorities within 10 days after the submission date.
Individuals pay the tax at the rate of 1.5% of the
property’s value. Moreover individuals, owning flats
and houses in cities, with the total areas more than
200 and 500 square metres respectively, are subject
to property tax at the rates of 1.8% and 2.5%.
As of 1 January 2011, to encourage timely replacement
of outdated equipment, a charge of 0.25% of the
equipment historic value would be collected from
legal entities (except for micro-firms and small
enterprises) for exploitation of fully depreciated
equipment.
Newly opened enterprises are exempt from property
tax for a period of two years from the date of their
registration, unless such enterprises have been
created on the basis of production facilities and assets
of existing enterprises. There is also the rate
reduction benefit available to companies engaged in
production and export of goods (work, services).
Property tax exemption is also available in respect of
machinery and equipment which is in use no more
than 10 years.
Land tax
Individuals and enterprises, including foreign legal
entities operating in Uzbekistan via a permanent
establishment, owning land plots or rights to their use
are subject to land tax. It is applied to taxpayers on
the basis of fixed fees established and based on the
quality, location and level of water supply to each
piece of land. Exemption is provided in respect of
land plots allocated for construction under the
projects included in the Strategic Investment
Programme of the Republic of Uzbekistan; this
exemption is granted for a period of the construction.
As of 1 January 2016, new amended rates of land tax
were introduced. Most of the new rates represent an
increase compared to the 2015 rates. For instance, natural resource) are subject to subsurface users’
land tax rates imposed on companies in Tashkent specific taxes, as listed below.
range from approximately UZS 19.84 mln per hectare
of land to UZS 99.19 mln per hectare of land Subsurface use tax (Royalty)
depending on the zone where the company is located.
Subsurface use tax is charged on volume of produced
As of 1 January 2014 land in Tashkent was divided
(extracted) natural resources that are ready for sale or
into five zones (instead of fourteen zones previously
transfer (including free of charge) and consumption
used) for land tax purposes.
for internal purposes. Taxable base is determined as
average weighted sales price.
Water-use tax

Enterprises using water (including PEs) in their Business activity Tax rate examples
production are subject to water-use tax. The tax rate
is set by the Cabinet of Ministers and depends on the Extraction of natural natural gas 30%, precious
source of the water (i.e. surface or underground). resources stones 24%, oil 20%,
Effective 1 January 2016 new amended rates of water gold 5%, silver 8%
tax were established. Enterprises (except for hydro Utilisation of by- 30% of tax rate applicable
stations, utility companies, agricultural companies products received to main natural resources
and individual entrepreneurs) will now pay UZS 71.2 during the extraction extracted
per 1 cubic metre for using surface water and UZS of natural resources
90.4 per 1 cubic metre of water used from
underground source. As of 1 January 2015 new tax
rate was introduced in respect of volume of water Excess profits tax
used for production of non-alcoholic beverages for Excess profits tax is assessed on the excess profit
enterprises producing non-alcoholic beverages. being the variance between the net sales revenue and
Effective 1 January 2016 this rate is set at UZS 11,500 revenue that would have been earned at the fixed
per cubic metre of water. price set by the legislation. Excess profits tax is not
payable by entities operating under production
Obligatory contributions (equated to taxes) sharing agreements.
As mentioned earlier in this chapter these obligatory
contributions are made to non-budget designated The list of natural resources and goods subject to
funds. These are generally assessed on the company’s excess profits tax includes: copper, cement, natural
turnover (net of VAT and excise, where applicable) at gas, polyethylene granules, clinker. Excess profits tax
the following rates: is paid at 50% of the taxable base.

 Road Fund – 1.4%, Signing and commercial discovery bonuses

 Educational and Medical Institutions Fund – These are one-off payments to the state budget. The
0.5%, and signing bonus is payable for the right to engage in
 Pension Fund – 1.6%.
exploration and extraction of natural resources. The
rate of payment of signing bonus ranges from 100 to
10,000 MMW (approximately USD 4,500 to USD
The taxable base for these obligatory contributions
450,000) depending on the type of minerals. The
may differ depending on the type of activity of a
commercial discovery bonus is paid for each field
company.
where a subsurface user discovers the natural
resources. Commercial discovery bonus is paid at the
Infrastructure development tax
rate of 0.1% of the proved reserves’ value.
Infrastructure development tax is not deductible for
CIT purposes as it is assessed on profits after payment
of income (profits) tax. This tax is charged at a
maximum rate of 8% which in most cases is the
effective rate.

There are also other taxes and levies established at

local levels, i.e. by the local state authorities
(Khokimiyats of cities and regions).

Taxation of subsurface users

In addition to standard taxes, subsurface users (i.e.
legal entities and individuals exploring and extracting
41
Taxation of individuals
Investor considerations
 Number of days residence criterion
 Non-residents are taxed at source at 20%
 Personal income tax rate reduction in the last few years
 Entrepreneurial income is subject to fixed tax (versus personal income tax)
 1 April is the filing deadline for personal income tax return for the preceding year
Territoriality and residence
In accordance with the Uzbek Tax Code, an individual
permanently residing in the Republic of Uzbekistan or
staying in Uzbekistan for 183 days (or more) in any
consequent twelve-month period ending in tax year
becomes resident in the Republic of Uzbekistan for
Personal income tax (PIT) purposes. Residents are
generally taxed in Uzbekistan on their worldwide
income. Non-residents are taxed on the income
received from Uzbekistan sources.
Taxable income
Taxable income includes employment income, income
from property, income in the form of material benefit
and other income.
Certain expenses incurred by legal entities are not
viewed as income of individuals, such as, without
limitation:
 costs related to transportation of employees
to/from the work place
 relocation costs (when an employee is
transferred to another work place) including
transportation and accommodation
 compensation payments (within statutory
norms), e.g. for use of private cars for business
purposes
 compassionate payments
 per diem allowances within statutory norms;
actual transportation/accommodation in full (if
supporting documents are available), and
 meal and transportation costs or respective
allowances provided by employers.
Employment income
Employment income consists of the following:
42
 all payments accrued and paid to individuals
under employment or civil contracts
 motivation payments, e.g. annual bonuses,
professionalism and tutorship allowances,
long-service premiums
 compensation payments, e.g. hardship and
overtime allowances, per diems exceeding
statutory norms, and
 payments for time-off, e.g. various vacation
pays, time for qualification courses attendance,
material assistance.
Income from property
Property income received by an individual includes
income in the form of interest/dividends/royalty,
rental income, income from sale of property in private
ownership. As of 1 January 2014 income of
individuals from sale of non-residential premises and
recurring sale of residential property shall be subject
to PIT, if sale takes place more than 1 time (previously
more than 2 times) in a consequent 12 months’
period. Minimum PIT rate of 7.5% is applied to
income from lease of property, gifts from individuals
(other than close relatives) in the form of shares and
stock, and to income of individuals from sale of
immovable property.
Income in the form of material benefit
Income in the form of material benefit includes the
following, without limitation:
 payments for goods/services made by
employers in favour of their employees
(kindergarten fees, utilities, food allowance,
recreation costs)
 gifts, goods (works or services) donated, and
 discounts to employees for goods (works or
services) produced.
Other income
Other income includes, without limitation, alimony,
scholarship, material assistance received from charity
foundations, prizes, lottery winning and grants.
Non-taxable income/deductions
The following is a representative list of items exempt
from personal taxation:
 state pensions
 payment by employer for medical treatment
(however, medical insurance paid by employer
is taxable)
 compensation for work-related injuries
 business trip allowance within the established
norms
 insurance coverage received
 money and property inherited
 bank interest from deposits with banks
 dividends reinvested in the same entity (i.e.
payer of dividends)
 part of salary (or other taxable income) that is
paid for an employee’s self-education or
education of his/her children under 26 in
Uzbek higher education institutions
 long-term life insurance premiums if these are
paid to legal entities that have an Uzbek
insurance licence
 income received gratuitously from close
relatives in the form of shares and stock
 income of individuals received in connection
with their involvement into agricultural works
for harvesting of raw cotton, and
 income of foreign employees of joint-stock
companies, received for their activities as
managerial personnel.
Taxation of foreign nationals
Under the Tax Code, no special rules apply to
expatriates. In calculating Uzbek tax liability, for
reporting purposes, expatriates who are normally
remunerated in foreign currency should convert their
foreign currency receipts into UZS at the official
exchange rate on each payment date.
Double taxation
As mentioned earlier in this Guide, international tax
treaties of the Republic of Uzbekistan prevail over the
Uzbek domestic tax legislation. Uzbekistan has
concluded a number of Conventions for the avoidance
of double taxation and the prevention of fiscal evasion
with respect to taxes on income and on capital.
43
Therefore, residents of treaty countries working in
Uzbekistan may take advantage of treaty protection.
Depending on provisions of particular double tax
treaties tax, credit or exemption may be claimed by
such non-residents. Please note that in order to
utilise the reliefs available by virtue of the Double Tax
Treaties, non-residents may need to present a
certificate from relevant tax authority proving their
tax residency in their home country in the relevant
reporting period, as well as documents confirming the
receipt of income and payment (abroad) of related PIT
from the income received from the Uzbek sources.
Tax compliance
Obligations of withholding agents
In accordance with tax legislation, Uzbek legal
entities, FLEs operating in Uzbekistan via a PE and
representative offices of FLEs – the withholding
agents – that pay out employment income are
responsible for withholding PIT and remitting it to the
relevant tax authority. Employer is also responsible
for reporting the amounts of income paid and PIT
withheld on a quarterly basis.
Withholding agents should also withhold PIT in few
other cases, including payment of (service) income
paid to non-residents.
Withholding agent paying benefits in-kind to a non-
employee individual may pay the benefit without
deducting PIT at source upon written application of
that individual. In this case, the individual is obliged
to pay PIT through filing annual PIT declaration.
Income received under labour agreements by foreign
nationals who have not become residents for Uzbek
PIT purposes is subject to taxation at source of
payment at the rate of 20%.
Tax returns
Tax return is to be filed by Uzbek residents, if/once
they earn:
 property income, including income from
intellectual property rights
 taxable income received from 2 and more
sources
 benefits-in-kind received from sources other
than principal employer
 income received from sources outside of
Uzbekistan, or
 income received from other sources that are
not tax agents.
PIT return is to be filed by 1 April following the year of
reporting/residence.

Foreign nationals that become residents for Uzbek

PIT purposes are required to file annual PIT
declarations, even if all their income has been taxed in
Uzbekistan through withholding at source of payment.
In case if a taxpayer did not submit the annual PIT
declaration, the tax authorities may assess and claim
settlement of his/her PIT liability at the maximum
23% rate based on information that they have on this
taxpayer.

If a foreign national becomes a tax resident in

Uzbekistan prior to 1 April of the current reporting
year, he should submit a declaration on the income
earned during the previous reporting year. For
instance, an expatriate has not become tax resident in
Uzbekistan as of 31 December 2015 but will become so
by 1 April 2016, he/she would be required to file the
annual PIT return for the calendar year 2015 (as non-
resident).

When a foreign national – tax resident – leaves

Uzbekistan for good, he/she should submit the
declaration at least one month before departure,
unless he/she leaves Uzbekistan prior to 1 February,
in which case he/she can leave without filing.

PIT liability as per the tax return should be settled by

1 June of the year following the reporting year.

44
Value Added Tax
Investor considerations
 Unless exempted or zero-rated, VAT is levied on all commercial transactions of business entities
 Input VAT on fixed assets and intangible assets is to be capitalised (not eligible for offset)
 Input VAT related to the production of exempt turnover is not recoverable
 ‘Place of supply’ rule is applied in respect of determining taxable turnover for VAT
Introduction
VAT, as all other taxes, is regulated by the Tax Code
and is closely tied to the direct tax legislation.
Like the Soviet legislation, the Uzbekistan Tax Code
distinguishes between goods, works and services
rather than just goods and services. However, this is
not an important distinction for VAT purposes as
works and services are treated similarly.
Scope of VAT
VAT-able turnover includes, without limitation:
 transfer of title for goods, provision of works
and services (e.g. shipment of goods, free of
charge transfer of goods/works/services,
barter)
 transfer of goods/works/services by one
structural division to another, when these are
separate taxpayers
 transfer of goods for lease or rent, and
 transfer of intellectual property rights.
Free of charge transfer of fixed and intangible assets,
as well as transfer of goods for tolling are not viewed
as taxable turnover for VAT. As per the new Tax
Code, transfer of goods (provision of works and
services) ‘for own needs’ may be treated as
expenditure; thus, it should not be viewed as taxable
turnover for VAT, unless such expenditure is non-
deductible for CIT purposes.
The standard rate of VAT is 20%, which applies to all
taxable sales of goods, works and services. There is a
zero rate on qualifying exports and certain internal
supplies, which is discussed later in this chapter.
Taxable persons
VAT taxable persons include all legal entities and their
branches engaged in entrepreneurial activity in
Uzbekistan, importers of VAT-liable
goods/works/services and legal entities that are
subject to reverse charge VAT (taxable turnover of
45
foreign suppliers). For legal entities under the
simplified tax regime payment of VAT is optional.
VAT is not paid by the legal entities undertaking
certain non VAT-able activities.
Individuals are not required to charge and account for
VAT.
Place of supply for goods
Goods are viewed as shipped in Uzbekistan – thus
subject to VAT – when goods are located in
Uzbekistan and do not leave the country as a result of
the sale, and/or goods are located in Uzbekistan at the
moment of shipment/transportation.
Place of supply for works/services
The place of supply of works and services between an
Uzbek resident supplier and Uzbek resident customer
is always Uzbekistan.
As regards provision of the works/services where one
party is an Uzbek resident and the other is non-
resident, the place of supply would differ depending
on the works/services type. Thus, the place of supply
of consulting, data-processing, engineering services
would normally be deemed the place where the buyer
of the services is located. The same rule would apply
to provision of personnel – if such personnel are
working at the buyer’s office, and services of foreign
telecom operators.
The list of services related to movable property for the
purposes of determining ‘place of supply’ has been
specified to include installation, assembly, processing,
re-processing, repair and technical maintenance.
Services that are deemed as provided outside of
Uzbekistan (based on the place of supply rule) are not
deemed as taxable turnover for VAT.
Import VAT
Goods, works and services imported into Uzbekistan
are subject to import VAT.
VAT on importation of goods is charged at the time of
customs clearance. Taxable base is comprised of the
customs value of the goods, plus excise tax and import
duty, if applicable. The responsibility for calculation
and reporting lies with the state customs authorities.
As regards works and services, VAT is accrued, paid
and reported by the entity receiving such works and
services, provided that the works/services are viewed
as supplied in Uzbekistan according to the ‘place of
supply’ rule.
Import contracts for procurement of equipment,
machines, mechanisms, components and spare parts,
which include installation and/or commissioning
works, training and other services as well as payment
of royalties, should separately indicate cost of such
services and royalties.
Zero rating
The principles are similar to those employed in the
EU’s Sixth Directive but the scope of zero-rating is
somewhat more limited. Supplies that are zero-rated
include:
 goods, works and services sold for official use
by diplomatic and similar representations and
for the personal use of their staff (unless they
are Uzbek citizens)
 goods exported for hard currency (except
export of precious metals)
 public utilities
 transit transportation of foreign goods through
Uzbekistan, as well as international
transportation of passengers, goods, mail etc,
and
 processing of goods under the customs regime
"processing on the customs territory of
Uzbekistan" (when the goods/products are
further re-exported).
In order to zero rate a supply of goods for export, the
supplier must hold the following documentation:
 copy of the relevant supply contract
 customs cargo declaration
 documents supporting the shipment of the
goods to the destination country, and
 bank statement confirming payment for
exported goods by foreign buyer.
Exempt supplies
Contrary to zero rate supplies, the input VAT related
to the production of exempt turnover is not eligible for
46
offset. Supplies that are exempt without credit
include but are not limited to the following:
 municipal public passenger transport services
(excluding taxis)
 most banking services
 insurance and reinsurance transactions
 issue and transfer of loans
 lease payments
 printed materials generated by publishing
houses, newspapers and magazines, book trade
organisations, etc.
 television and cinematography
 technological equipment imported for
approved projects in so far as the equipment
had been listed in a feasibility study approved
by the relevant government body
 imported medicines (as of 1 January 2011,
exemption is not applicable for the types of
medicines that are produced locally) and
medical products (as per approved list), and
 medical, sanatoria and health resort, tourist-
excursion services.
Taxable amount
In general, the taxable value of a supply is the price
paid, which is normally assumed to be exclusive of
VAT. It will, where applicable, include the value of
any excise due and, in the case of imported goods,
excise tax and customs duty levied.
The tax base is generally the turnover from the sales
of goods, works or services except those that are VAT-
exempt.
Where goods, works or services are sold below cost,
the tax authorities have authority to revalue the
transaction to their cost.
When a fixed asset is sold, VAT is charged only on the
amount of any excess between the asset’s sale price
and its accounting net book value in the person’s
accounts, determined in accordance with Uzbek
accounting standards. VAT is not chargeable if the
fixed asset is sold for an amount equal to or less than
its net book value.
For VAT purposes, market valuation will also apply to
any transfer of goods, works or services for no
consideration. Tax authorities can, in theory, revalue
any supply deemed to be made at below market value.
Where a discounted price is charged, the legislation is
open to interpretation as to what value applies for
VAT purposes. A safe approach would be to account
for VAT on the basis of the supply’s market value.
As regards importation of goods VAT is assessed on
the customs value of the imported goods determined
in accordance with the customs legislation. Normally,
the customs value is determined as the invoice value
of imports including freight, insurance and other
similar expenses. However, based on the Law of the
Republic of Uzbekistan on Customs Tariffs the
customs authorities have the right to determine the
customs value of imported goods independently using
one of the following valuation methods:
 value of deals with identical goods
 value of deals with similar goods
 ‘subtraction of costs’
 ‘addition of costs’, or
 ‘reserve method’.
VAT on imported works and services is accrued on the
value of services provided, which is documented in the
act of competition of works/services.
Non-recoverable input VAT
Apart from input VAT related to production of exempt
turnover, VAT incurred on purchases relating to non-
business use is not recoverable either. Expenses that
relate to both business and non-business activities
should be directly attributed between the two to the
greatest extent possible. There is no stipulated
method for making a business/non-business
apportionment and this can be negotiated with the tax
authorities on a case-by-case basis. The only
requirement is that the apportionment should be fair
and reasonable.
In order to demonstrate its entitlement to a VAT
deduction a person should keep all original
documents relating to the relevant expenses.
Input VAT on fixed and intangible assets is not
eligible for offset and should be capitalised in the cost
of assets. Input VAT on imported goods assessed but
unpaid due to a specific import VAT exemption
(purposeful exemption) will be eligible for offset.
VAT compliance
Registration
A single, general tax registration encompasses VAT
registration. There is no separate VAT registration
requirement in Uzbekistan.
Records
All source documents must be kept, including:
 commercial invoices
 VAT invoices
47
 related contracts, and
 customs documents.
The general rule is that a partially exempt person
should maintain separate accounting for its taxable
and exempt supplies.
The VAT records must be kept for at least five years
and may be kept abroad but the originals of all
documents and records should be readily available at
the request of the tax authorities.
Whilst an entity may choose to keep records
electronically, it must also keep the original hard copy
versions for VAT record-keeping purposes.
Information in VAT invoice
It is vital that a supplier of goods, works or services
issues a VAT invoice or ‘Schet Factura’ according to
the prescribed format, as only then is the VAT on the
invoice recoverable by the customer. The following
information must be included on a VAT invoice:
 name
 address and tax identification number of both
supplier and buyer
 description of the goods, works or services
 quantity of the goods, works or services
 selling price
 the rate and amount of VAT, and
 the rate and amount of excise tax.
A VAT invoice should be issued at the time of the
dispatch of goods or at the time of the acceptance of
services or works. For continuous supplies, an invoice
for the apportioned part of the supply should be
issued at least once a month.
As of 1 January 2016, Tax Code was supplemented to
allow electronic VAT invoices.
A full VAT invoice should normally be issued in all
cases except for the following:
 if goods are sold directly to individuals, in
which case a receipt can be issued which does
not have all the requirements of a VAT invoice
 when bank operations are formalised by bank
statement which replaces VAT invoice
 when insurance companies formalise insurance
services by agency agreement or insurance
policy, and
 when goods are imported/exported, in which
case customs export declaration replaces VAT
invoice.
The above documents are viewed as documents
replacing VAT invoices. If supply of goods (works,
services) is subject to VAT, the amount of VAT shall
be separately indicated in such documents.

Returns and payments

The VAT accounting period is the calendar year.

Reporting and filling of VAT should be made quarterly
for micro-firms and firms and small enterprises and
monthly by other categories of taxpayers. Each return
is cumulative and covers the period from the
beginning of the fiscal year (1 January) to the end of
the reporting period.

Taxpayers are required to file VAT returns by the 25th

day of the month following the reporting period.
Payment of VAT due shall be made: for micro-firms
and small companies - quarterly by the filling
deadline, and for other VAT payers - monthly by the
25th day of the following month; final annual return is
submitted by 25 March (for enterprises with foreign
investment) or by 15 February (for other taxpayers) of
the year following the reporting year. As of 1 January
2013 all VAT-payers are also required to supplement
VAT returns with the registers of tax invoices in
respect of purchased and sold goods, works and
services.

Refunds

Excess of input VAT over output VAT is generally

credited against future VAT liabilities. If such excess
is a result of zero rate VAT supply, the overpayment
should be refunded within 30 days from the written
application of the taxpayer. However, the actual
refund can be received if the taxpayer has no
outstanding liabilities on other taxes. There is a set of
documents that should be filed along with the
application for refund.

As of 1 January 2016 deadline for submision of VAT

refund application related to zero-rate turnover was
set at 12 months from the end of the reporting period,
in which excess VAT was generated.

48
Introduction to PricewaterhouseCoopers
Assurance and Advisory Services
PricewaterhouseCoopers
worldwide organisation
PricewaterhouseCoopers (www.pwc.com), the world's
largest professional services network of member
firms, helps its clients build value, manage risk and
improve their performance. Drawing on the talents of
more than 208,000 people in 157 countries,
PricewaterhouseCoopers provides a full range of
business advisory services and 22 industry-specialised
practices to leading global, national and local
companies as well as to public institutions.
These services include audit, accounting and tax
advice; management, information technology and
human resource consulting; financial advisory
services including mergers and acquisitions, business
recovery, project finance, and litigation support;
business process outsourcing services; and legal
services provided through a global network of
affiliated law firms.
Tax Services
PricewaterhouseCoopers refers to the network of
member firms of PricewaterhouseCoopers
International Limited, each of which is a separate and
independent legal entity.
PricewaterhouseCoopers in
Uzbekistan
Our office is located in Tashkent at the following
address:
88A, Mustaqillik prospekt, Mirzo-Ulugbek District,
100000, Tashkent, Uzbekistan
Telephone +998 (71) 120 6101
Facsimile +998 (71) 120 6645
Contact persons:
Otabek Muhammadiyev, Managing Director,
Assurance Services
at otabek.muhammadiyev@uz.pwc.com
Jamshid Juraev, Senior Manager, Tax Services
at jamshid.juraev@uz.pwc.com
49
 Audits conducted in accordance with
International Standards on Auditing (ISA) and
National Standards
 Statutory Audit Services
 Business Investigations and Plans
 Conversion of accounts to IFRS and various
national GAAP
 Due Diligence reviews
 Evaluation of foreign investment options
 Internal control system testing, reviews and
direction on corrective measures
 Other technical accounting services
 Internal audit services – Outsourcing and Co-
sourcing, and
 Agreed upon procedures.
 International tax planning and structuring
 Local tax planning
 Bookkeeping, HR/payroll administration and
tax compliance services
 Tax compliance reviews before state tax
inspections
 On-site assistance during state tax inspections
 Assistance in appeals process:
identification/research of arguments, drafting
appeals
 Correspondence with the Ministries, Tax and
Customs Authorities
 Assistance with expatriate taxation and
compensation issues
 Assistance with customs issues
 After-tax cash flow models
 Review of contracts and other legal documents
regarding tax considerations
 PSA negotiations, with accompanying Tax
Regulation drafting and negotiation
 Value-added tax optimisation
 Assistance with tax registration
 Civil code and labour code assistance, and
 HRS Compensation Surveys, HR consulting.
Appendices
Appendix A – Tips for the business visitor

Visitors' visas Entry Visa

Work Permit
Working visa

Currency Uzbek Sum (UZS, tiyin)

Internally the national currency is symbolised as “СУМ”
and externally “UZS “could be used.

International time GMT +5

Business hours Working hours: 9 am – 6 pm

Statutory holidays 1 January – New Year

8 March – International Women’s day
21 March – Navruz
9 May – Memory day
1 September – Independence day
1 October – Teacher’s day
8 December – Constitution day
Two religious holidays are Kurban Hayit and Ramazan
Hayit – the dates of these holidays are changing year by
year.

Weights and measures kilograms and grams

kilometres, metres and centimetres

Dates and numbers 11 January 2016: day, month, year (11/01/16)

Numbers To denote thousands of the monetary units usually

commas are used and to denote fraction – periods, e.g.
UZS 1,500.59.

50
Appendix B – Major tax rates (other rates are mentioned in the Guide)
Corporate Income Tax Infrastructure Development Tax

2014 2015 2016 2014 2015 2016

Standard rate 8% 7.5% 7.5% Rates 8% 8% %8

Depreciation rates Personal Income Tax

2014 2015 2016 2014 2015 2016

Buildings and other 5% 5% 5% Up to 1 minimum n/a 0% 0%

structures statutory wage*

Cars, special equipment, 20% 20% 20% From 1** to 5 minimum 7.5% 8.5% 7.5%
computers and related statutory wage
hardware
From 5 to 10 minimum 16% 17% 17%
Lorries, buses, special 15% 15% 15% statutory wage
cars and trucks,
industrial machinery and In excess of 10 minimum 22% 23% 23%
equipment, agricultural statutory wage
machinery and * The 2016 annual minimum statutory wage for PIT calculation
equipment, office purposes is UZS 1,562,880.
furniture ** For 2014 – from 0 to 5 minimum statutory wage.

Railway, river and air 8% 8% 8%

Payroll Taxes
transport vehicles,
thermo-technical 2014 2015 2016
equipment, turbines,
electric and diesel drives, (Employees’) Pension 6.5% 7% 7.5%
power supply and fund contribution
communication lines,
pipelines Professional Union fund 1% 1% 1%
contribution (voluntary)
Depreciable assets not 15% 15% 15%
mentioned above (Employers’) Unified 25% 25% 25%
social payment

Withholding Tax
Obligatory Contributions
2014 2015 2016
2014 2015 2016
Dividend and interest 10% 10% 10%
Road Fund 1.4% 1.4% 1.4%
Insurance and 10% 10% 10%
reinsurance premiums Educational and Medical 0.5% 0.5% 0.5%
Institutions Fund
International transport 6% 6% 6%
and telecommunications Pension Fund 1.6% 1.6% 1.6%

Royalties, rents, lease 20% 20% 20%

income, management
fees and other income

51
Appendix C – Withholding taxes

Country Dividends % Interest % Royalties %

Austria 52 /15 10 5

Azerbaijan 10 10 10

Bahrain 8 8 8

Belarus 15 10 15

Belgium 52 /15 10 5

Bulgaria 10 10 10

Canada 51 /15 10 53, 4, 6 /10

China 10 10 10

Czech Republic 58 /10 09 /5 10

Estonia 58 /10 5 10

Finland 51 /15 5 06 /55 /104

France 52 /10 07 /5 0

Georgia 58 /15 09 /10 10

Germany 58 /15 09 /5 33, 5, 10 /54

Greece 8 09 /10 8

Hungary 10 09 /10 10

India 10 07 (a, b) /10 10

Indonesia 10 10 10

Iran 8 10 5

Ireland 52 /10 5 5

Israel 10 10 54 /10

Italy 10 09 /5 5

Japan 15 07 /10 04 /103, 5, 6, 10

Jordan 78 /10 10 20

Kazakhstan 10 07 /10 10

Kuwait 58 /10 09 /8 20

Kyrgyzstan 5 5 15

Latvia 10 07 (a, b) /10 10

Lithuania 10 07 (a, b) /10 10

Luxembourg 58 /15 07 (d) /10 5

Malaysia 10 09 /10 10

Moldova 51 /15 09 /10 15

(The) Netherlands 013 /58 /15 014 /10 014 /10

Oman 09 /7 09 /7 10

Pakistan 10 09 /10 15
52
Poland 511 /15 07 (a) /10 10

Romania 10 07 (a, b) /10 10

Russia 10 07 (a, b, c) /10 0

Saudi Arabia 7 7 10

Singapore 5 5 8

Slovak Republic 10 10 10

Slovenia 8 8 10

South Korea 58 /15 5 210 /5

Spain 58/10 07(a,b)/5 5

Switzerland 511 /15 07 /5 5

Thailand 10 07 (a, b) /1012 /15 15

Turkey 10 07 (a) /10 10

Turkmenistan 10 09 /10 10

Ukraine 10 10 10

United Arab Emirates 07 (a) /58 /15 07 (a) /10 10

United Kingdom 51 /10 5 5

Vietnam 15 07 (a, b) /10 15

1. Where the beneficial shareholder owns not less than 10% of the voting shares.
2. Where the beneficial owner holds at least 10% of the capital of the paying entity.
3. Where royalties are paid for patents, trademarks, know-how, etc.
4. Where royalties are paid for copyrights on literature, cinema, musical works, etc.
5. Where royalties are paid for secret formulas, processes, or know-how.
6. Where royalties are paid for computer software, patents, designs, models, or plans.
7. Where one of the following conditions is met:
a. recipient is a local authority or corporate body constituted under public law, including the central
bank of the state, or interest is paid by the local authorities or corporate bodies
b. interest is paid in respect to debt claims or loans, guaranteed, insured, or aided by the state or on
behalf of the state
c. interest is paid in respect to credit sales of industrial, commercial, scientific equipment of goods
and merchandise or provision of services by an enterprise to another enterprise, or
d. interest is paid in respect to a loan of any kind granted by a bank.
8. Where the beneficial shareholder owns no less than 25% of the capital of the paying entity.
9. Where the recipients of the interest are governments of contracting states or any governmental body (such
interest is exempt from WHT).
10. Where royalties are paid in respect to use or the right to use industrial, commercial, or scientific equipment.
11. Where the beneficial shareholder owns no less than 20% of the voting shares.
12. Where the interest is received by any financial institution (including insurance companies).
13. Under the provisions of the Netherlands’ Company Tax Act and the future amendments thereto, a company
that is a resident of the Netherlands is not charged to Netherlands company tax with respect to dividends the
company receives from a company that is a resident of Uzbekistan.
14. If and as long as the Netherlands, under its national legislation, levies no withholding tax on interest or
royalties paid to a resident of Uzbekistan, the withholding tax rate for interest and royalty income paid at
source in Uzbekistan shall be reduced to zero percent .

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Appendix D – Useful sources of information

Government websites
www.stat.uz
www.gov.uz
www.mfer.uz
www.minjust.uz
www.mfa.uz
www.cbu.uz/
www.mineconomy.uz
www.press-service.uz

Sources of statistical indicators used in this Guide:

www.stat.uz
www.cia.gov/library/publications/the-world-factbook/geos/uz.html
http://data.worldbank.org/country/uzbekistan
http://www.investuzbekistan.uz

Business groups

American Chamber of Commerce (AmCham)

Chamber of Commerce and Industry of Uzbekistan

Other useful addresses and websites

www.uzreport.com
www.uzinfoinvest.uz
www.uzdaily.com

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